NEW YORK (Bloomberg) -- Oil climbed from the highest close in more than seven weeks as investors overlooked deteriorating Chinese manufacturing amid the first monthly decline in OPEC production since November.
Futures advanced as much as 1.7% in New York after rising 3% on Monday. Output from the Organization of Petroleum Exporting Countries slid by 79,000 bopd to 33.06 MMbopd in February, according to a Bloomberg survey. China’s manufacturing purchasing managers index fell to 49 last month, missing the median estimate of 49.4 in a Bloomberg survey of economists. It hasn’t been at weaker level since January 2009.
“We’ve seen a rally, but we’re moving into a period of soft seasonal demand against a background of high inventories,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “It’s possible that we’ve got about as far as we can based on sentiment. For West Texas, there’s a pronounced resistance level just under $35/bbl.”
Oil has slipped about 8% this year and averaged under $32/bbl during the past two months, the longest stretch below that level in more than 12 years. Saudi Arabia, which has reached a preliminary deal with Russia, Venezuela and Qatar to freeze output if other states join them, will work with producers to curb market fluctuations, according to the Saudi Press Agency.
West Texas Intermediate for April delivery gained as much as 57 cents to $34.32/bbl on the New York Mercantile Exchange and was $34.24 at 7:46 a.m. London time after earlier dropping as much as 0.7%. The contract climbed 97 cents to $33.75 on Monday, the highest close since Jan. 6. Total volume traded was about 16% above the 100-day average. Prices rose 0.4% in February, the first monthly gain since October.
OPEC Output
Brent for May settlement gained as much as 48 cents, or 1.3%, to $37.05/bbl on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of 95 cents to WTI for May. The April contract expired Monday up 87 cents at $35.97.
Iranian output rose by 140,000 bopd to 3 MMbopd in February, the highest since July 2012 when sanctions against the nation were strengthened. Iraqi production dropped by 125,000 bpd to 4.385 MMbpd, according to the survey of oil companies, producers and analysts. Saudi Arabian output was unchanged at 10.2 MMbopd.
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