Oil rises on Chinese data


Oil rose today on data showing factories in China revved up output in November, while Europe's debt problems and signs of rising US fuel inventories capped gains.

China's official purchasing managers' index (PMI) climbed to a seven-month high in November, but rising input prices also signalled a need to tighten monetary policy to curb inflation, a move that would cut energy demand from the world's second-largest oil user

US crude for January gained 35 cents to $84.46 a barrel by 0612 GMT, after tumbling almost 2 per cent. Prices still posted a third straight monthly gain, up by more than 3 per cent in November, when they also touched a 25-month high of $88.63. ICE Brent rose 33 cents to $86.25.

US crude inventories fell by 1.1 million barrels in the week through November 26th, the American Petroleum Institute (API) reported yesterday, compared with expectations for a 900,000-barrel decline.

A drawdown of a bigger magnitude than that reported by the API "would bring oil inventories closer to their five-year average, which might provide the market with a positive impulse," said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.

Inventories of distillates including heating oil and diesel unexpectedly rose by 224,000 barrels last week in top consumer the United States, according to the API.

Should the increase be confirmed in a government report from the Energy Information Administration (EIA) due today at 1530 GMT, that would end a streak of nine consecutive weekly drops.

US consumer confidence rose in November to its highest in five months and US Midwest business activity grew faster than expected, providing further evidence of economic recovery.

Still, a faster-than-expected fall in prices of US single-family homes in September underscored the hurdles remaining for the recovery.

The euro continued to struggle across the board today, stuck near 11-week lows against the dollar as the market waited to see what European policymakers would do next to try to contain worries about euro zone debt.