By Moming Zhou
Crude oil rose for a second day as data showed economic growth in China and Japan and as U.S. equities rose to the highest level in nearly 12 weeks.
Oil climbed as much as 2.5 percent as China’s manufacturing may expand in October and Japan’s exports exceeded economists’ forecasts. China is the second-largest consumer of oil, trailing the U.S., and Japan is third. The Standard & Poor’s 500 Index gained for a third day after Caterpillar Inc. (CAT) earnings beat analyst estimates.
“We’ve got some decent numbers out of China and Japan and oil is up because of this economic optimism,” said Phil Flynn, an analyst with PFGBest in Chicago. “Oil has been moving with equities recently.”
Crude for December delivery rose $2.04, or 2.3 percent, to $89.44 a barrel at 10:58 a.m. on the New York Mercantile Exchange. Prices are down 2.1 percent so far this year.
Brent oil for December settlement increased 92 cents, or 0.8 percent, to $110.48 a barrel on the London-based ICE Futures Europe exchange.
China’s manufacturing may expand this month for the first time since June, snapping the longest contraction since 2009, according to a preliminary index of purchasing managers by HSBC Holdings Plc and Markit Economics released today.
The reading of 51.1 for the index was the highest in five months and compares with the final reading of 49.9 for September and August. A reading above 50 indicates expansion.
Japanese exports rose 2.4 percent in September from a year earlier as demand for cars and auto parts increased, the Ministry of Finance said in Tokyo today. The median estimate of 26 economists surveyed by Bloomberg was a 1 percent increase.
“As long as China and Japan are growing, they are going to buy an increasing amount of crude oil from the rest of the world, and that’s good for the oil market,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis.
The Standard & Poor’s 500 Index advanced 0.8 percent to 1,248.24, the highest level since August. The Dow Jones Industrial Average rose 0.4 percent to 11,855.79. The S&P’s GSCI Index of 24 raw materials increased 1.4 percent to 639.59.
Caterpillar, the world’s largest maker of construction and mining equipment, said full-year sales will be at the top end of a previously forecast range of $56 billion to $58 billion.
U.S. gross domestic product, the value of all goods and services produced, rose at a 2.5 percent annual rate in the third quarter after advancing 1.3 percent in the previous three months, according to the median forecast of 68 economists surveyed by Bloomberg News before the Commerce Department’s Oct. 27 release.
Orders for business equipment increased in September and new-home sales stabilized, other data may show this week.
European leaders yesterday held their 13th crisis summit in 21 months, debating how to cut Greece’s debt burden, boost the firepower of the region’s bailout fund and bolster banks ahead of a further meeting on Oct. 26.
“If Europe doesn’t come up with anything, this is going to get ugly, and that’s what’s driving the boat right now,” said O’Grady.
Hedge funds boosted bullish bets on oil by the most in five weeks in the week ended Oct. 18.
Net-long positions, or wagers on rising prices, in U.S. oil held by managed money, including hedge funds, commodity pools and commodity-trading advisers, in futures and options combined expanded by 13,685 futures equivalents, or 8.7 percent, to 171,378, the biggest gain since Sept. 13, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Oct. 21.
Tropical Storm Rina, the 17th named storm of the Atlantic hurricane season, is forecast to become a hurricane tomorrow on a path toward Mexican resorts on the Yucatan Peninsula, the National Hurricane Center said.
Rina, about 370 miles (595 kilometers) east-southeast of Chetumal, Mexico, and moving northwest at 6 mph, the center said in a website advisory before 11 a.m. Miami time.
To contact the reporters on this story: Moming Zhou in New York at Mzhou29@bloomberg.net;
To contact the editor responsible for this story: Dan Stets at email@example.com