Oil Trades Near 7-Week High on Signs Industrial Demand Rising
Aug. 4 (Bloomberg) -- Crude oil traded near a seven-week high after rising yesterday as increased industrial activity bolstered optimism that fuel consumption will rebound.
Oil gained after reports showed that U.S. manufacturing shrank at the slowest pace in 11 months and factory output in China advanced to the highest level in almost a year. The Standard & Poor’s 500 Index climbed above 1,000 for the first time since November, prompting speculation raw-material demand and prices will increase.
“Better-than-expected manufacturing numbers here in the U.S. and more growth numbers released from China helped support the continued rally in the equities and commodities markets,” Mike Sander, an investment adviser with Sander Capital in Seattle, said by e-mail.
Crude oil for September delivery traded at $71.20 a barrel, down 38 cents, on the New York Mercantile Exchange at 9:33 a.m. Sydney time. Yesterday, it rose $2.13, or 3.1 percent, to $71.58, the highest settlement since June 12.
The U.S. Institute for Supply Management said yesterday its manufacturing index climbed to 48.9 last month from 44.8 in June. An increase to 46.5 was expected, according to a Bloomberg News survey of economists.
CLSA Asia-Pacific Markets said yesterday its index of China’s manufacturing rose to a one-year high as stimulus spending stoked domestic demand. China accounts for about 45 percent of Asia’s oil use.
Investors Optimistic
The S&P 500 added 1.5 percent to 1,002.63 in New York, the highest level since President Barack Obama was elected on Nov. 4. The Dow Jones Industrial Average rallied 1.3 percent.
“The S&P 500 hitting 1,000 is a clear indication investors are optimistic for a complete economic recovery,” Sander said.
U.S. crude inventories probably rose 1.15 million barrels in the week ended July 31, according to the median of 12 estimates by analysts surveyed by Bloomberg News before an Energy Department report tomorrow. Nine of those surveyed said stockpiles rose and three forecast a drop.
Gasoline supplies probably fell 1.25 million barrels from 213.1 million the week before, according to the survey.
Gasoline for September delivery traded at $2.0618 a gallon in New York, down 0.75 cents, at 9.33 a.m. in Sydney. Yesterday, it increased 5.67 cents to end the session at $2.0693.
Brent crude oil for September settlement gained $1.85 yesterday to $73.55 a barrel on London’s ICE Futures Europe Exchange.
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