Market Close: Sep 01 Down
Sep 1st, 2015 by loren
Oil futures fell on Tuesday, with weak Chinese manufacturing data dulling the outlook for energy demand and U.S. prices settling lower after tallying a three-session climb of more than 27%. October West Texas Intermediate crude declined by $3.79, or 7.7%, to settle at $45.41 a barrel on the New York Mercantile Exchange. Prices gave back most of the $3.98, or 8.8%, gain they saw a day earlier. October Brent crude on London’s ICE Futures exchange fell $4.59, or 8.5%, to $49.56 a barrel, following a two-session climb of more than 15%.
“The oil drop is normal technical selling and not a surprise after three days of big gains,” said Colin Cieszynski, chief market strategist at CMC Markets. “Short-term momentum swing traders would want to step out at some point.” Cieszynski said this week’s U.S. petroleum-supply data from the American Petroleum Institute late Tuesday and from the Energy Information Administration early Wednesday “could be interesting and may spark more action.” Analysts polled by Platts are looking for a weekly decline of 800,000 barrels in crude supplies. U.S. oil prices tallied a total gain of 27.5% on Thursday, Friday and Monday—their largest such rally since Iraq’s invasion of Kuwait in August 1990.
Much of Monday’s gains came after indications that the Organization of the Petroleum Exporting Countries may consider cutting output to boost oil prices, and on signs of a decline in U.S. oil production. Despite hitting multiyear lows toward the end of August, Nymex crude prices rebounded sharply in recent days to finish up 4.4% for the month, while Brent crude gained 3.7% over the same period.
But soft Chinese economic data Tuesday helped to weaken oil prices. China’s official manufacturing purchasing managers index fell to 49.7 in August from 50.0 a month ago, official data showed. The Caixin China manufacturing purchasing managers index fell to a final reading of 47.3 in August, the lowest in more than six years. China’s latest manufacturing data suggest that “industrial activity softened in August, but the weakness should be temporary and there are good reasons to expect a rebound in coming months,” said Julian Evans-Pritchard, analyst at Capital Economics. In the U.S., the final Markit manufacturing reading for August fell to 53.0 from 53.8 in July and the ISM manufacturing index was at 51.5%, showing that manufacturers grew at the slowest pace in August in more than two years.