Oil fluctuated above $US84 a barrel as signs of accelerating economic growth in China, the world's biggest energy consumer, countered concerns that Europe's debt crisis is worsening.
Futures reversed losses after a report showed Chinese manufacturing expanded at the fastest rate in seven months in November. Crude earlier fell as much 0.6 per cent as the euro dropped to the lowest in 11 weeks against the dollar on speculation the European Union may have to bail out more member states. A strengthening US currency limits the appeal of commodities to investors.
“China's economy will continue to expand as much as possible and in five years their oil consumption will be much bigger,” said Tetsu Emori, a commodity fund manager at Astmax in Tokyo. “Currently the market is more focused on the dollar and the euro and worried about the credit issues in Europe.”
The January contract was at $US84.25 a barrel, up 14 cents, or 0.2 per cent, in electronic trading on the New York Mercantile Exchange. It earlier traded as low as $US83.63. Yesterday, futures lost $US1.62 to $US84.11.
Crude trimmed its losses after China's Purchasing Managers' Index rose to 55.2 from 54.7 in October, according to the country's logistics federation today. That was more than the 54.8 median estimate of 14 economists surveyed by Bloomberg News.
Europe's debt
Prices slumped yesterday as concern mounts that Europe's debt problems are spreading to countries including Spain, Portugal and Italy. The region's governments sought to bolster the euro November 28 by giving Ireland an 85 billion-euro ($US111 billion) rescue package.
The European currency traded at $US1.2997 after dropping to $US1.2969 yesterday, the weakest since September. 15.
Futures fluctuated today before an Energy Department report that may show US crude and distillate fuel stockpiles declined last week. Oil capped its third monthly increase in November, climbing 3.3 per cent. Prices are up 6 per cent this year.
US inventories of distillates, which include heating oil and diesel, dropped 1.1 million barrels, according to a Bloomberg News survey of analysts before today's report. The industry-funded American Petroleum Institute yesterday said they climbed 224,000 barrels.
Crude supplies
Supplies of crude declined 1.15 million barrels, according to the median of 16 responses in the survey. The API yesterday said they dropped 1.4 million barrels.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
Brent crude for January settlement was at $US86.08 a barrel, up 16 cents on the ICE Futures Europe exchange in London. It slumped $US1.42, or 1.6 per cent, to $US85.92 yesterday.