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Crude Trades at Two-Week High as China Manufacturing Improves

Dec. 3 (Bloomberg) -- Crude traded at the highest level in two weeks in New York as China’s official manufacturing index rose to a seven-month high, signaling economic recovery in the world’s second-biggest crude consumer.

West Texas Intermediate futures added as much as 0.7 percent, extending the first monthly gain since August. China’s Purchasing Managers’ Index rose to 50.6 in November, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Dec. 1 in Beijing. A reading above 50 indicates expansion. Egypt has experienced more than a week of protests over President Mohamed Mursi’s decree that gives him new powers.

“The data shows an acceleration in Chinese growth, which has been the main driver for global demand,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Add geopolitical factors like the tensions surrounding Egypt’s constitution, and most signals point up in the short term.”

Crude for January delivery rose as much as 65 cents to $89.56 a barrel, the highest since Nov. 19, in electronic trading on the New York Mercantile Exchange and was at $89.43 at 1:12 p.m. London time.

Brent for January settlement rose 61 cents to $111.84 a barrel on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $22.41 to WTI, compared with $22.32 at the end of last week.

Fund Bets

Hedge funds raised bullish oil bets on Brent crude to their highest level in six weeks, according to the ICE exchange.

Speculative bets that Brent will rise, in futures and options combined, outnumbered short positions by 108,112 lots in the week to Nov. 27, the exchange said today in its weekly Commitment of Traders report. The increase of 11,016 contracts, or 11 percent, from 97,096 last week brings net-longs to their highest level since Oct. 16, the data shows.

Money managers boosted net-long positions, or wagers on higher U.S. oil prices, by 5.7 percent in the seven days ended Nov. 27, according to the Commodity Futures Trading Commission’s Nov. 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.

Egyptian activist groups and parties including one founded by Nobel Laureate Mohamed ElBaradei said they would march on the presidential palace tomorrow to protest Mursi’s constitutional referendum, scheduled for Dec. 15.

A Nov. 22 decree giving Mursi sweeping new powers has sparked protests by secularists and youth activists that were among the biggest since last year’s uprising against Hosni Mubarak. While the president says the measures, including legal immunity for the Islamist-dominated panel that drafted the constitution, are temporary, protesters have charged him with seeking dictatorial powers and emulating his predecessor.

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