Crude Oil Rises for a Second Day on Jump in U.S. Manufacturing

Feb. 2 (Bloomberg) -- Crude oil rose for a second day in New York after manufacturing in the U.S. increased at the fastest pace since August 2004, signaling that fuel use in the world’s biggest energy-consuming country may gain.

Oil advanced the most in four weeks yesterday after the Institute for Supply Management’s factory index climbed to a higher-than-anticipated 58.4 in January, from December’s 54.9. European manufacturing also increased as companies raised output to meet reviving global demand, a separate report showed. Energy Department data tomorrow may show a drop in U.S. distillate fuel inventories.

“We can see that manufacturing is improving,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “We now want to see that number backed up with good fundamentals in the inventory data.”

Crude oil for March delivery gained as much as $1.01, or 1.4 percent, to $75.44 a barrel in electronic trading on the New York Mercantile Exchange. It was at $75.17 at 10:03 a.m. Singapore time. Yesterday, the contract rose 2.1 percent to settle at $74.43, the biggest one-day increase since Jan. 4.

The U.S. manufacturing figure exceeded the median forecast of 55.5 from 67 economists surveyed by Bloomberg News. Readings higher than 50 signal an expansion. Manufacturing accounts for about 12 percent of the economy.

European companies raised production in January as a global economic recovery spurred exports. An index of manufacturing in the 16-nation euro region climbed to 52.4 from 51.6 in December, London-based Markit Economics said yesterday.

Distillate Supplies

U.S. distillate fuel stockpiles, including heating oil and diesel, probably fell last week as wholesalers prepared for colder weather, a Bloomberg News survey showed.

Inventories declined 1.15 million barrels in the week ended Jan. 29, based on the median of 12 estimates from analysts before tomorrow’s the Energy Department report. Supplies previously climbed to 157.5 million barrels, 16.2 percent above the five-year average level.

Colder weather moved into the U.S. Northeast, which consumes about four-fifths of the country’s heating oil, over the final days of last month. Temperatures across the eastern states will be below normal from Feb. 9 to Feb. 15, according to the National Weather Service.

Brent crude oil for March settlement rose as much as $1.41, or 1.9 percent, to $74.52 a barrel on the London-based ICE Futures Europe exchange. It was at $73.87 at 10 a.m. Singapore time. Yesterday, the contract climbed 2.3 percent, the most since Jan. 4, to settle at $73.11.