SINGAPORE (Bloomberg) -- Crude oil rose above $70 a barrel after a report showed that Chinese manufacturing grew at the fastest pace in more than a year.

Oil rebounded from the biggest decline in two weeks on Tuesday after China’s Purchasing Manager’s Index for July rose at the fastest pace in 16 months. U.S. crude inventories probably declined last week, according to a Bloomberg survey before a government report tomorrow.
“The market’s been saved by the Chinese PMI data after Tuesday’s collapse,” said Robert Montefusco, a broker at Sucden Financial in London. “Demand is there and will offer support for the time being, but until we see recovery in the rest of the world the markets will stay fragile.”
Crude oil for October delivery rose as much as 68 cents, or 1 percent, to $70.64 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $70.23 at 9:40 a.m. in London.
On Tuesday, crude declined 3.8 percent to $69.96 a barrel, the biggest drop since Aug. 14. Prices have increased 58 percent this year.
The U.S. Institute for Supply Management may report at 10 a.m. New York time its manufacturing index climbed to 50.5 in August, according to a Bloomberg News survey median. Readings above 50 signal expansion.
Orders placed at factories likely jumped 2.2 percent in July, the most in two years, economists said before a U.S. Commerce Department report due tomorrow.
------------‘Picking up’
“The European Union and the U.S. are past the worst point and their economies are picking up,” said Daniel Liu, an energy strategist at brokers MF Global Ltd. in Singapore. “So the export economy of China will be reviving to supply these markets and that’s good for oil demand.”
An Energy Department report tomorrow will probably show U.S. crude oil stockpiles declined last week, another Bloomberg survey showed. Supplies likely dropped 500,000 barrels from 343.8 million the prior week, according to the median of responses from eight analysts.
Gasoline inventories probably fell 1.05 million barrels, a sixth weekly drawdown. Stockpiles of distillate fuel, including heating oil and diesel, probably increased 675,000 barrels, according to the survey. Inventories are near their highest since 1983.
South Korea, Asia’s third-largest oil buyer, imported more crude in August for the first in four months as drivers used more gasoline amid signs of an economic recovery.
Imports rose 2.4 percent to 72 million barrels last month from 70.2 million barrels a year earlier, the Ministry of Knowledge Economy said in an e-mailed statement.
--------------Spending jumped
Asia’s fourth-largest economy expanded at the fastest pace in almost six years last quarter as exports and household spending jumped. Gasoline demand gained 16 percent in July, according to state-run Korea National Oil Corp.
Brent crude oil for October settlement rose as much as 79 cents, or 1.1 percent, to $70.44 a barrel on the London-based ICE Futures Europe exchange. It traded at $70.31 at 9:05 a.m. London time. On Tuesday, the contract declined 4.3 percent to end the session at $69.65.