BLBG: Oil Rises as Dollar Weakens on Speculation of Fed Credit-Easing Measures
Oil gained in New York as China’s manufacturing expanded at the quickest pace in six months, and hedge funds boosted bets that prices will rise.
Funds and other large speculators increased wagers on rising crude prices by 9.3 percent in the seven days ended Oct. 26, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. Oil rose amid expectations U.S. policy makers will announce more large-scale asset purchases, or quantitative easing, when they meet tomorrow.
“Commodities are attractive as an asset class as demand burgeons from developing nations,” Christopher Bellew, senior broker with Bache Commodities Ltd. in London. “Generally the market is in a remarkably stable range, a ‘Goldilocks’ mode that is neither too high nor too low, as Saudi’s ability to tweak supplies caps prices.”
Oil for December delivery rose as much as 90 cents, or 1.1 percent, to $82.33 a barrel on the New York Mercantile Exchange. It was at $82.15 at 12:28 p.m. London time. Brent crude for December settlement rose as much as 99 cents, or 1.2 percent, to $83.77 a barrel on the ICE Futures Europe exchange in London.
Manufacturing in China expanded in October at the fastest pace in six months, adding to signs that economic growth is withstanding cooling efforts by the government.
China’s Purchasing Managers’ Index rose to 54.7 in October, the Federation of Logistics and Purchasing said today. That’s higher than 53.8 for both the previous month and the median forecast from 13 economists surveyed by Bloomberg News. The country overtook the U.S. last year as the biggest energy user.
U.S. gross domestic product grew at a 2 percent annual rate in the third quarter, the Commerce Department said Oct. 29. The central bank’s Federal Open Market Committee will meet in Washington on Nov. 2 and Nov. 3.
“As people feel the GDP number we had on Friday was OK, and quantitative easing will support that recovery, then more dollar weakness will come initially,” said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney. “That will help support the price of crude.”
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
