* China manufacturing PMI rises to seven-month high
* Technicals show oil may drop towards $83 []
* Coming Up: US EIA oil inventory report; 1530 GMT
(Recasts with price gain, updates prices)
By Alejandro Barbajosa
SINGAPORE, Dec 1 (Reuters) - Oil rose on Wednesday on data
showing factories in China revved up output in November, while
Europe's debt problems and signs of rising U.S. fuel
inventories capped gains.
China's official purchasing managers' index (PMI) climbed
to a seven-month high in November, but rising input prices
also signalled a need to tighten monetary policy to curb
inflation, a move that would cut energy demand from the
world's second-largest oil user. []
U.S. crude for January <CLc1> gained 35 cents to $84.46 a
barrel by 0612 GMT, after tumbling almost 2 percent on
Wednesday. Prices still posted a third straight monthly gain,
up by more than 3 percent in November, when they also touched
a 25-month high of $88.63. ICE Brent <LCOc1> rose 33 cents to
$86.25.
U.S. crude inventories fell by 1.1 million barrels in the
week through Nov. 26, the American Petroleum Institute (API)
reported on Tuesday, compared with expectations for a
900,000-barrel decline.
A drawdown of a bigger magnitude than that reported by the
API "would bring oil inventories closer to their five-year
average, which might provide the market with a positive
impulse," said Stefan Graber, a commodities analyst with
Credit Suisse in Singapore.
Inventories of distillates including heating oil and
diesel unexpectedly rose by 224,000 barrels last week in top
consumer the United States, according to the API.
Should the increase be confirmed in a government report
from the Energy Information Administration (EIA) due on
Wednesday at 1530 GMT, that would end a streak of nine
consecutive weekly drops. The average forecasts from a Reuters
poll of analysts is for a decline of 1.1 million barrels.
And gasoline stockpiles rose 1.1 million barrels last week
according to the API, almost three times the projected
400,000-barrel gain.
U.S. consumer confidence rose in November to its highest
in five months and U.S. Midwest business activity grew faster
than expected, providing further evidence of economic recovery.
Still, a faster-than-expected fall in prices of U.S.
single-family homes in September underscored the hurdles
remaining for the recovery. []
The euro continued to struggle across the board on
Wednesday, stuck near 11-week lows against the dollar as the
market waited to see what European policymakers would do next
to try to contain worries about euro zone debt.
A day earlier, the single currency suffered yet another
setback as Standard & Poor's threatened to cut the credit
ratings of Portugal.
S&P's warning came after Ireland on Sunday secured an
85-billion-euro bailout package from the European Union and
International Monetary Fund, seven months after Greece was
thrown a lifeline to tackle its debt problems.
(Reporting by Alejandro Barbajosa; Editing by Himani Sarkar)
