Oil prices got closer to Tuesday’s levels this morning after surrendering most of their gains following a selloff in Asian and European markets, while US shares retreated on a bearish update on the growth in the services sector. ISM (Institute of Supply Management) reported a decline to 53.8 in June from 55.4 in May, showing the slowest expansion of non-manufacturing activity since February. The data stalled the rally that saw the Dow Jones and S&P 500 indexes gain more than 1.5% in the US, while the UK’s FTSE 100 rallied 3%. Today’s selloff in the UK markets has so far wiped out about a third of yesterday’s gains. The markets were recovering from the steep declines they suffered over the past two weeks on fears of a double dip recession, spurred by disappointing updates that came out in the US and China. The data released last week showed a slowdown in manufacturing activity in the US and China. Friday’s key US employment update revealed a drop of 125,000 in non-farm payrolls and just 83,000 jobs created in the private sector. Crude has recently been moving along with the stocks as investors have been taking clues about the outlook for oil demand from movements in share prices. Traders will now be looking to the inventories reports from the American Petroleum Institute (API) and Energy Information Administration (EIA), which will be released today and tomorrow respectively. Both reports showed declines in oil stockpiles in the US, suggesting higher demand in the world’s leading energy consumer. August Brent Crude climbed to US$72/barrel, while US light, sweet crude for August delivery advanced to US$72.36/barrel.

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