Crude Follows Stocks Lower on Economic Worries
U.S. crude-oil futures fell Tuesday amid declines in broader markets as worries re-emerged about the economic outlook following weak data on the manufacturing sector.
Light, sweet crude for October delivery settled $1.17, or 1.2%, lower at $95.30 a barrel on the New York Mercantile Exchange, after trading as high as $97.37 a barrel earlier in the session. Brent crude on the ICE futures exchange settled $1.60, or 1.4%, lower at $114.41 a barrel.
Prices tumbled from positive to negative territory early in the session as investors fled from a poor reading on the U.S. manufacturing sector.
The Institute for Supply Management's purchasing-managers' index slipped to 49.6 last month from 49.8 in July, the lowest reading since July 2009. A reading above 50 indicates expanding activity.
"The market responded according to the ISM data," said Rich Ilczyszyn, head of Chicago brokerage iiTrader. "I don't think we have any case here for $95 oil based on demand...I think the market is running out of gas right here."
Earlier Tuesday, oil futures neared their highest level in a week but failed to hold above the 200-day moving average at $96.65 a barrel, a key technical level. Analysts said crude still appears unable to break out of the recent trading range between roughly $94 and $98.
While U.S. fuel-product supplies have dropped in recent weeks compared with average levels, signs of weakness in the global economy, particularly in China, have tempered hopes about continued oil and fuel demand.
Still, traders, worried about increasing tension in the Middle East, are reluctant to bet on big declines. Rhetoric from Israel and Iran about Iran's nuclear program has grown more contentious in recent weeks.
And a report from The New York Times over the weekend said the U.S. is undertaking "a range of steps short of war," such as mine-sweeping exercises in the Gulf, in an effort to deter an Israeli attack on Iran's nuclear facilities.
Front-month October reformulated gasoline blendstock, or RBOB, settled 2.06 cents lower at $2.9522 a gallon. October heating oil fell 1.1% to $3.1468 a gallon.
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