MW: Oil lower after U.S. manufacturing disappoints
By Claudia Assis and Kate Gibson, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures traded lower Tuesday after data showed U.S. manufacturing contracted in August for a third straight month.
Prices were seesawing between small gains and losses, tugged by optimism that central banks would act to spur economic growth and worry about supplies after shutdowns due to last week’s hurricane on the Gulf Coast.
Crude for October delivery CLV2 +0.71% declined 84 cents, or 0.9%, to $95.63 a barrel on the New York Mercantile Exchange. It had earlier traded as high as $97.37 a barrel.
The Institute for Supply Management on Tuesday said its manufacturing index fell to 49.6% in August from 49.8% in July, a third month of declines. Markets expected the index to come in slightly above 50%. Readings below 50% indicate a contraction.
Oil markets earlier had taken heart on comments by European Central Bank President Mario Draghi on Monday, who said he would be comfortable purchasing three-year government bonds to reduce borrowing costs for struggling euro-zone nations.
Draghi’s comments came ahead of an ECB policy meeting Thursday. Read full story about Draghi’s remarks .
Investors hoped Draghi on Thursday would detail the ECB’s bond-buying plan at a news conference due after the ECB meeting.
He told members of the European Parliament on Monday that buying shorter-dated government notes does not constitute state financing, according to media reports citing a parliament member.
Also Thursday, the U.S. Department of Energy is due to release its weekly inventory report, one day later than usual because of the three-day weekend. U.S. markets were closed Monday for the Labor Day holiday.
A U.S. Bureau of Safety and Environmental Enforcement report released Monday had roughly 58% of oil production and 39% of natural-gas output from the Gulf of Mexico still closed due to Hurricane Isaac. Read the government statement.
Traders expect the weekly report to show a decline due to the shut-ins ahead of the storm.
Lackluster manufacturing reports in China and the euro zone on Monday had also kept oil under pressure.
Other energy futures turned mixed, with gasoline and natural gas holding on to gains.
Gasoline for October delivery RBV2 +2.63% rose 1 cent, or 0.4%, to $2.98 a gallon. October natural gas NGV12 +4.44% rose 8 cents, or 3%, to $2.88 per million British thermal units.
Heating oil for the same month’s delivery HOV2 +1.38% turned lower, off less than 1 cent, or 0.1%, to $3.18 a gallon.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Kate Gibson is a reporter for MarketWatch, based in New York.
