Oil traded near the highest close in a week in New York, swinging between gains and losses, as shrinking U.S. stockpiles countered signs manufacturing may have contracted in China, the world's biggest energy user. September futures slid as much as 0.4 percent after rising 0.4 percent. Preliminary data for a purchasing managers’ index by HSBC Holdings Plc and Markit Economics showed the gauge fell to 48.9 this month from a final reading of 50.1 in June. U.S. crude inventories decreased more than forecast in a seventh week of declines. “West Texas Intermediate looks like it will stay in the $95 to $100 range,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. Crude for September delivery declined as much as 34 cents to $98.06 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.26 at 11:58 a.m. Singapore time. It earlier gained as much as 43 cents to $98.83 a barrel. The contract yesterday climbed 54 cents to $98.40. The August future, which expired, rose 64 cents to $98.14 a barrel, the highest settlement since July 7. Prices are up 28 percent the past year. Brent oil for September settlement slid 35 cents, or 0.3 percent, to $117.80 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $19.51 a barrel to U.S. futures, compared with a record close of $22.63 on July 14. China Manufacturing HSBC’s manufacturing index last fell below 50, which denotes a contraction, in July 2010. The preliminary reading is based on 85 percent to 90 percent of the total responses to its monthly purchasing managers survey sent to executives in more than 400 companies. The final July reading is due on Aug. 1. Oil earlier rose on bets a drop in U.S. crude inventories signals stronger demand. Stockpiles last week fell 3.73 million barrels to 351.7 million, according to an Energy Department report yesterday. Analysts surveyed by Bloomberg News forecast a decrease of 2 million. The seven-week decline in supplies is the longest run in two years. Stockpiles at Cushing, Oklahoma, the physical delivery point for West Texas Intermediate oil, the grade traded in New York, tumbled 977,000 barrels to 36.7 million. Refinery operations advanced 2.3 percentage points last week, the report showed. Operating rates were forecast to be unchanged, according to the median of 14 analyst estimates in a Bloomberg News survey. Gasoline supplies increased 757,000 barrels to 212.5 million, the first gain in five weeks. They were forecast to decline 250,000 barrels, according to the survey. Inventories of distillate fuel, a category that includes heating oil and diesel, rose 3.43 million barrels to 148.5 million barrels. To contact the reporter on this story: Ann Koh in Singapore at akoh15@bloomberg.net To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

Source