Weak China Data, Falling US Stocks Push Oil Lower
NEW YORK (AP) — Weak manufacturing data from China and falling U.S. stock markets pushed oil to its biggest one-day decline in five weeks Wednesday.
Benchmark crude for September delivery dropped $1.84, or 1.7 percent, to close at $105.39 a barrel on the New York Mercantile Exchange. That's the biggest percentage decline since June 21.
Another decline in U.S. supplies failed to give oil a jolt. U.S. crude oil inventories declined by 2.6 million barrels, bringing the four-week drop to nearly 30 million barrels. Still, at 364.2 million barrels, the nation's oil supply is in the upper half of the average range for this time of year. And gasoline supplies remain above year-ago levels, according to the Energy Department.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said that supplies of oil and refined products remain high, and fundamentals don't support current prices.
"It is becoming increasingly difficult to construct a bullish argument that would support triple-digit crude pricing in either key benchmark," Ritterbusch said in a note to clients. He was referring to West Texas Intermediate, the benchmark for the U.S. crude, and Brent, the benchmark for international crudes.
Brent crude, traded on the ICE Futures exchange in London, fell $1.23 to finish at $107.19 a barrel.
An HSBC survey released Wednesday showed China's manufacturing at an 11-month low this month, a disappointing performance that puts pressure on Chinese leaders to reverse a deepening slowdown in the world's second-largest economy.
"A further slowdown in the manufacturing sector added to investor unease ... putting further pressure on labor markets and reinforcing the pessimistic outlook for demand growth" in China, said a note from Sucden Financial Research in London.
China also impacted U.S. stock markets. Besides the manufacturing data, China's slowing economy dragged down earnings at Caterpillar, the world's largest construction equipment company. Shares of Caterpillar, a component of both the Dow Jones industrial average and the Standard & Poor's 500 index, dropped 2.7 percent.
In other energy futures trading on the Nymex:
- Wholesale gasoline lost 0.4 cent to end at $3.05 a gallon.
- Heating oil lost 2 cents to finish at $3.05 a gallon.
- Natural gas fell 4.5 cents to end at $3.70 per 1,000 cubic feet.
Pablo Gorondi in Budapest contributed to this report.
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