IV:Crude oil futures bounce off 4-month low after China PMI data
Investing.com - Crude oil futures bounced off a four-month low on Thursday, as appetite for growth-linked assets strengthened following the release of upbeat Chinese manufacturing data.
On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD97.30 a barrel during European morning trade, up 0.45%.
New York-traded oil futures traded in a range between USD97.07 a barrel, the daily low and a session high of USD97.69 a barrel.
The December contract fell to USD96.16 a barrel on Wednesday, the weakest level since July 1, before settling at USD96.86 a barrel, down 1.46% for the day.
Oil futures were likely to find support at USD96.07 a barrel, the low from July 1 and resistance at USD100.29 a barrel, the high from October 22.
Oil prices strengthened after data showed that China’s HSBC manufacturing index for October rose to a seven-month high of 50.9, up from a final reading of 50.2 in September. Economists had expected the index to tick up to 50.5.
The measure remained above the 50.0-mark for the third consecutive month, indicating expansion in manufacturing activity.
China is the world’s second-largest oil consuming nation and manufacturing numbers are used as indicators for future oil demand growth.
The data offset fears over the Chinese economy, a day after market sentiment was hit by concerns that China’s central bank would tighten monetary policy to help control inflation.
U.S. crude prices have been on a downward trend in recent weeks amid concerns the recent U.S. government shutdown created a drag on economic growth and eroded demand in the world’s largest oil consumer.
Official data released Wednesday showed that U.S. crude oil inventories rose by 5.2 million barrels last week to hit 379.8 million barrels, the highest level since June 28.
Investors now looked ahead to the release of key U.S. economic data later in the day to help assess the timing for a reduction in the Federal Reserve’s bond purchasing program.
The U.S. was to produce data on initial jobless claims and new home sales later Thursday.
Official data released earlier in the week showed that the U.S. economy added 148,000 jobs in September, well below expectations for an increase of 180,000.
The unemployment rate ticked down to a four-and-a-half year low of 7.2% from 7.3% in August, but this was partially due to more people dropping out of the labor force.
The disappointing data bolstered expectations that the Fed would postpone plans to start scaling back its asset purchase program until at least the beginning of next year.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for December delivery inched up 0.1% to trade at USD107.93 a barrel, with the spread between the Brent and crude contracts standing at USD10.63 a barrel.
