Oil hits 10-week high; China and U.S. data strong

By Anna Louie Sussman and Matthew Robinson

NEW YORK (Reuters) - Brent crude futures rose to a 10-week high on Monday, supported by strong manufacturing data from China and the United States, and concerns about supplies of Russian crude.

Market participants are closely watching comments from the Organization of the Petroleum Exporting Countries as members gathered in Vienna for the producer group's meeting later this week, where officials are expected to leave their supply limits unchanged for the first half of 2014.

Crude rose early after data showing the U.S. manufacturing sector expanded last month at its fastest pace in 2-1/2 years came on the heels of a report that No. 2 oil consumer China's manufacturing growth hit an 18-month high in November.

Volume surged and Brent extended its gains by nearly $1 a barrel shortly before noon EST (1700 GMT) on news that two cargoes of Russian Urals crude for December export from the Baltic ports of Primorsk and Ust-Lugahad have been cancelled, market players said. Exports of the crude had been expected to drop in December after Russia approved a boost of deliveries to Belarus.

Brent crude for January rose $1.76 to settle at $111.45 a barrel, after hitting a session high of $112.34. U.S. crude rose $1.10 to settle at $93.82 a barrel.

The spread between the two contracts finished at $17.63, after swinging over $2 between $16.22 and $18.44 during the session.

The February Brent contract also surged more than $2 a barrel at one point, and finished up $1.81 at $111.14 a barrel.

Refined products gained as well, with U.S. RBOB gasoline futures finishing up 1.56 cents, or 0.6 percent, at $2.6784 a gallon.

"Whenever you get this turmoil on the Brent side, people look over to the U.S.. Our products look a lot cheaper," said Phil Flynn, an energy analyst at the Price Futures Group in Chicago, Illinois.

"The U.S. has almost become the swing producer when it comes to product."

OPEC PRODUCTION LIKELY STEADY

Ali al-Naimi, the oil minister for OPEC kingpin Saudi Arabia, indicated there was no need for the group to adjust supply as he arrived in Vienna for the meeting on Wednesday.

Faced with fast-rising supplies from the United States, the group might cut supply to prop up oil prices, if not for several cartel members pumping well below par because of civil strife or sanctions.

Iran, Libya, Nigeria and Iraq of the 12-member group account for almost 3 million barrels per day of supply outage on the 90 million bpd world market.

HEDGE FUNDS BULLISH ON BRENT

Hedge funds and other large speculators raised their bets on higher Brent crude prices for the second straight week in the seven days to November 26, exchange data showed on Monday, providing another indication money manager sentiment towards the market may have turned.

The speculator group raised its net long futures and options positions by 22,380 contracts to 129,761, figures from the IntercontinentalExchange showed, taking the increase to more than 45 percent since hitting a year low on November 12.

In the same week, oil speculators cut their long positions in U.S. West Texas Intermediate crude (WTI) futures. Oil speculators cut their net long position in WTI by 5,489 contracts to 285,076 in the week ending November 26, data from the Commodity Futures Trading Commission showed.

The CFTC said its data this week did not include trader positions in the NYMEX financial crude oil futures contract, which are normally included in the aggregate calculations. It did not give a reason for the omission. (Additional reporting by Jeanine Prezioso, Christopher Johnson and Jacob Gronholt-Pedersen; editing by Keiron Henderson, Anthony Barker, David Gregorio, Bob Burgdorfer and Marguerita Choy)