Oil rises from two-week low as China's manufacturing expands

A purchasing managers' index released by HSBC Holdings Plc Monday and a government-backed PMI issued Sunday showed that China's manufacturing grew in October. In the same month, output from the Organization of Petroleum Exporting Countries expanded to its highest in 10 months, a Bloomberg survey showed.

“Everything coming out of Asia shows they are developing better than other countries,” said Sintje Diek, an analyst with HSH Nordbank in Hamburg.

Crude oil for December delivery rose as much as US$1, or 1.3 percent, to US$78 a barrel in electronic trading on the New York Mercantile Exchange. It was at US$77.87 a barrel at 10:45 a.m. London time. Earlier it fell to US$76.56, the lowest price since Oct. 15.

Futures lost 4.4 percent last week, the first pullback in a month, after U.S. crude oil and gasoline stockpiles rose, equities declined and the dollar's rebound reduced the investment appeal of commodities. Prices were down 3.6 percent Oct. 30 after a report showed U.S. consumer spending in September fell for the first time in five months.

OPEC output averaged 28.76 million barrels a day in October, up 80,000 barrels from September, according to a Bloomberg survey of oil companies, producers and analysts. The entire gain came from the OPEC members with quotas, all except Iraq. The 11 countries pumped 26.31 million barrels a day, 1.465 million barrels above their target. Iraqi output was unchanged.

Hedge-fund managers and other large speculators increased their bets on rising oil prices to a 19-month high last week, according to U.S. Commodity Futures Trading Commission data.

Speculative net-long positions, the difference between orders to buy and sell the commodity, climbed 47 percent to 109,619 contracts in the week ended Oct. 27, the commission said Oct. 30. That's the highest since March 14, 2008.

Brent crude for December settlement climbed as much as US$1.18, or 1.6 percent, to US$76.38 a barrel on the London-based ICE Futures Europe exchange. The contract was at US$76.26 at 10:44 a.m. in London.

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