Oil rises above $84 in Asia amid Europe debt woes

KUALA LUMPUR, Malaysia — Oil prices rose above $84 a barrel amid the release of surveys showing China's manufacturing boom accelerated in November.

Benchmark oil for January delivery rose 59 cents to $84.61 a barrel at late afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell $1.62 to settle at $84.11 on Tuesday.

Since Nov. 1, oil has drifted between $81 a barrel and a two-year high of just above $88 a barrel, but remains up about 6.6 percent on the year.

Prices fell back since Tuesday because "there was really no reason to hold it up," said Mike Sanders of Sander Capital Advisor.

"There are still huge amounts of bad debts on the books in the U.S. and all over Europe," he said. Following a bailout plan for Ireland by the European Union earlier this week, Sanders said, "Portugal is likely next on the bailout wagon and Spain is close."

The dollar also remained strong, adding pressure to oil pricing.

"With so much uncertainty in the market place, we could easily see the price of oil go back down to $81 and possibly test $80," he added.

Meanwhile, surveys released Wednesday showed China's manufacturing recovery accelerated in November. China is a major importer of oil and other raw materials, and stronger manufacturing could help to boost global demand.

Traders are looking at U.S. government supply data due later Wednesday for more clues about the strength of crude demand.

The American Petroleum Institute's report Tuesday showed a smaller-than-expected drawdown in crude oil stocks but a rise in distillate and gasoline inventories.

In other Nymex trading in January contracts, heating oil rose 2.05 cent to $2.3449 a gallon, gasoline added 2.8 cents at $2.2149 a gallon and natural gas gained 4.9 cents to $4.229 per 1,000 cubic feet.

In London, Brent crude rose 69 cents to $86.61 a barrel on the ICE Futures exchange.