Oil traded near the highest close in a week in New York as shrinking U.S. stockpiles countered signs manufacturing may have contracted in China, the world’s second- biggest crude user. September futures swung between gains and losses after sliding as much as 0.4 percent today as preliminary data for a purchasing managers’ index showed the gauge fell to 48.9 this month from a final reading of 50.1 in June. Prices gained 0.4 percent earlier amid optimism that U.S. crude inventories decreased for a seventh week, the longest run in two years. “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 was at $98.45 a barrel, up 5 cents, at 1:52 p.m. Singapore time in electronic trading on the New York Mercantile Exchange. It fell as low as $98.06 a barrel and rose as high as $98.83. 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 29 percent the past year. Brent oil for September settlement was at $118.09 a barrel, down 6 cents, on the London-based ICE Futures Europe exchange. The European benchmark contract traded at a premium of $19.67 a barrel to U.S. futures, compared with a record $22.63 on July 14. China’s manufacturing may contract for the first time in a year as output and new orders drop, according to preliminary data for a purchasing managers’ index by HSBC Holdings Plc and Markit Economics. The gauge fell to 48.9 for July from a final reading of 50.1 for June. The final July reading is due Aug. 1. A reading below 50 denotes a contraction. Europe Debt German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed on a joint position to solve Greece’s debt crisis on the eve of a summit convened to stamp out contagion in European bond markets. Details will be released today when euro region leaders meet in Brussels, the governments said in a statement after seven hours of talks in Merkel’s Chancellery in Berlin. “There appears to be some tangible progress. It may not be the case at all in the meeting, but it’s certainly the case that the concern around the impact is lowered,” said Colin Whitehead, a Sydney-based analyst with Fat Prophets. “This macro-issue recedes and in general, that’s going to be better for sentiment for oil.” U.S. Stockpiles 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 utilization rates advanced 2.3 percentage points last week to 90.3, the highest in a year, 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

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