MW: Oil falls nearly 4% after weak manufacturing, homes data
Natural gas bucks trend after positive inventories report
By Claudia Assis and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) -- Crude-oil futures fell for a fourth consecutive session Thursday, adding to earlier losses after manufacturing and housing gauges showed worrying declines and stoked fears of a slowdown in global economic growth and thus in energy demand.
Weak manufacturing data out of China and a surprise increase in the number of people filing jobless claims in the U.S. had already dented oil earlier in the session.
Light sweet crude for August delivery dropped $2.77, or 3.7%, to $72.84 a barrel on the New York Mercantile Exchange. A close around those levels would send oil back to levels last seen in early June.
The expansion in the U.S. manufacturing sector moderated in June after three months of very rapid growth, according to a survey of purchasing managers at companies across the nation. The Institute for Supply Management index fell from 59.7% in May to 56.2% in June, the lowest since December. Readings over 50% indicate most firms are growing.
New sales contracts on existing homes fell 16% in May from a year ago after a federal subsidy for buyers expired, the National Association of Realtors reported. The pending home sales index plunged 30% in May after rising 23% between January and April.
Most energy prices followed oil lower, but natural gas futures posted gains as government report on inventories for the week ended June 25 showed a below-expectations increase.
Natural gas for August delivery added a penny, or 0.2%, to $4.63 per million British thermal units.
Prices jumped close to 2% immediately after the Energy Information Administration on Thursday morning reported an increase of 60 billion cubic feet to the nation's stockpiles of natural gas.
Analysts surveyed by Platts had expected a rise of 61 billion to 65 billion cubic feet. The reported increase was smaller than the 73 billion cubic feet increase for the corresponding week in 2009 and the five-year average of 82 billion cubic feet.
Oil held on to losses after a surprise increase in the number of people filing jobless claims in the past week. The Labor Department reported Thursday a rise of 13,000 to 472,000 in the week ended June 26. Expectations were for a decline.
"Commodity markets are mostly lower, as weaker-than-expected data from China and Moody's warning on Spain's credit rating are increasing investor worries over global growth," said analysts at Action Economics.
Moody's Investors Service warned on Wednesday that it may downgrade the triple-A sovereign credit ratings on Spain, citing worsening economic conditions.
In China, two closely watched measures of manufacturing activity released Thursday pointed to slowing growth in June, further escalating worries over the state of the world's economic recovery. Read more on China growth and PMI.
Oil prices tend to be closely correlated with the outlook for global growth. As a result, bad economic news usually triggers declines in crude futures.
On Wednesday, oil futures ended lower on the New York Mercantile Exchange following a government report on U.S. petroleum inventories that was perceived as bearish. Crude prices lost 9.3% during the three months through June, ending a winning run of five consecutive quarterly gains.
U.S. stocks opened slightly higher Thursday but fell shortly after. The Stoxx Europe 600 index (ST:SXXP 237.65, -5.67, -2.33%) fell 1.2% to 240 points as bearishness bled into European bourses from selling overnight in Asia.
