Crude traded close to the highest level in almost two weeks in New York as China's official manufacturing index rose to a seven-month high, signalling economic recovery in the world's second-biggest crude consumer.
China's Purchasing Managers' Index rose to 50.6 in November, the National Bureau of Statistics and China Federation of Logistics and Purchasing said December 1 in Beijing. A reading above 50 indicates expansion.
"The data shows an acceleration in Chinese growth, which has been the main driver for global demand," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt. Crude for January delivery was at $88.82 a barrel, down 9 cents, in electronic trading on the New York Mercantile Exchange at 8.57am London time.
The contract climbed 84 cents on November 30 to $88.91, the highest close since November 19.
Prices gained 3.1 per cent last month and are down 10 per cent this year.
Brent for January settlement declined 12 cents to $111.11 a barrel on the London-based ICE Futures Europe exchange.
The European benchmark contract was at a premium of $22.24 to WTI, down from $22.32 on Nov. 30. Fund Bets Hedge funds raised bullish oil bets for a second week as U.S. stockpiles fell to the lowest level in a month.
Money managers boosted net-long positions, or wagers on higher US oil prices, by 5.7 per cent in the seven days ended November 27, according to the Commodity Futures Trading Commission's November 30 Commitments of Traders report.
China's PMI underscores optimism that the economy may recover after a seven-quarter slowdown.
The report's gauge of new orders climbed to its highest level since April.
"The PMI figure is the latest piece in the jigsaw that is starting to show an improvement in the rate of economic growth in China," said Ric Spooner, a chief market analyst at CMC Markets in Sydney.
Bloomberg
