Investors worry about China, U.S. weak manufacturing
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures retreated Monday, feeling the pinch of a manufacturing slowdown in the U.S. and China and paring the sharp gains made in the previous session.
Crude for August delivery CLQ2 -2.57% lost $1.73, or 2%, to trade at $83.24 a barrel on the New York Mercantile Exchange, adding to earlier losses.
Oil prices ended Friday with their largest one-day percentage gain since 2009, up more than 9% as investors welcomed European leaders’ plan to stabilize the region’s banking sector. Read more on oil's Friday rally.
After Friday’s jump, however, investors were back to worrying about weakening demand for oil amid negative macroeconomic reports in China and the U.S.
The final reading of HSBC’s China manufacturing Purchasing Managers’ Index for June showed the gauge slipping to 48.2, down from 48.4 in May. It exceeded a preliminary estimate of 48.1, but it was the lowest level since March 2009. Read more on China's PMI.
Chinese economic data “dampened the mood,” early on, analysts at JBC said in a note to clients Monday.
U.S. equity markets traded lower, and the dollar was stronger, keeping the pressure on for oil. U.S. manufacturing data gave investors little reason to cheer, with activity entering contraction territory for the first time since July 2009.
The Institute for Supply Management index fell to 49.7% in June, from 53.5% in May. Economists polled by MarketWatch had expected a drop to 52.3%. Read more about manufacturing data.
The ICE dollar index DXY +0.40% , which measures the U.S. unit against a basket of six major currencies, rose to 81.874, from 81.658 late Friday. Read more on currencies.
A rising greenback is a negative for oil and other commodities, as it makes the commodity more expensive to holders of other currencies.
Other energy futures tracked crude lower to begin the holiday-shortened trading week, with natural gas and gasoline the top losers.
August natural gas NGQ12 -0.99% retreated 2 cents, or 0.6%, to $2.81 per million British thermal units, while gasoline for the same month’s delivery RBQ2 -1.44% was off 4 cents, or 1.3%, to $2.60 per gallon.
August heating oil HOQ2 -1.86% lost 4 cents, or 1.5%, to $2.67 per gallon.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney.
