Crude Oil Rebounds From One-Month Low Before Report on U.S. Manufacturing

Crude oil rose from the lowest price in a month before a U.S. report forecast to show that manufacturing expanded in the world’s biggest energy user.

Oil snapped four days of declines in New York as the dollar fell against the euro, increasing the investment appeal of commodities. U.S. factory production and housing starts probably gained in July, economists said before reports this week. Goldman Sachs Group Inc. said the oil market is strengthening, and repeated its forecast for a gain to $85 to $95 a barrel.

“The question is whether we’re seeing a genuine recovery that will lead prices above $80 or just a corrective rebound,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London. “The stuttering economic recovery will ensure that rallies will only go so far, and I expect we’ll see sideways trading between $75 and $78 this week.” “

Crude oil for September delivery climbed as much as 56 cents, or 0.7 percent, to $75.95 a barrel on the New York Mercantile Exchange and was at $75.64 at 12:10 p.m. London time. Brent crude oil for September settlement was at $75.35 a barrel, up 24 cents, on the London-based ICE Futures Europe Exchange.

New York contracts lost 0.5 percent on Aug. 13 to settle at $75.39, the lowest close since July 12.

The dollar fell to $1.2806 against the euro after reaching $1.2734 earlier today, the strongest rate since July 21. The U.S. currency touched the highest in nearly four weeks versus the euro after Japan said its economy expanded at the slowest rate in three years.

Negative Correlation

“Traders will likely trade upon the negative correlation with the dollar, which seems to be back in vogue,” said Stephen Stork, president of consultant Stork Group Inc. in Villanova, Pennsylvania, in an e-mailed note. “We will need to see strong domestic housing starts data tomorrow while the rest of the week is relatively quiet.”

Factory production and housing starts probably rose in July as part of the U.S. economy’s uneven transition to a slower pace of growth in the second half of the year, according to analysts.

Output increased 0.5 percent, led by a rebound in auto making as fewer plants closed for mid-year retooling, according to the median estimate of 57 economists surveyed by Bloomberg News before Federal Reserve figures Aug. 17. Another report may show work began on more houses for the first time since April.

Emerging Markets

Commodities demand from emerging markets and limited growth in supplies will help to support prices toward the end of the year, according to Goldman Sachs Group Inc., which backed oil, gold, copper, zinc and platinum.

Goldman Sachs reiterated an “overweight” recommendation on commodities, analysts led by Allison Nathan and Jeffrey Currie wrote in an Aug. 13 report. Goldman pared its 12-month forecast for gains in the S&P GSCI Enhanced Total Returns Index to 19 percent from 21.6 after recent gains in agricultural commodities and metals.

Hedge-fund managers and other large speculators increased their net-long position in New York crude-oil futures in the week ended Aug. 10, according to the U.S. Commodity Futures Trading Commission.

Speculative long positions, or bets prices will rise, outnumbered short positions by 60,336 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions rose by 4,658 contracts, or 8 percent, from a week earlier.