By Claudia Assis and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures came off their lows Friday on a surprise increase for a gauge of U.S. manufacturing activity, but still looked poised to snap a three-day winning streak.
Crude for August delivery CL1Q -0.92% declined $1.12, or 1.2%, to $94.30 a barrel on the New York Mercantile Exchange.
It had earlier traded as low as $93.45 a barrel, hit by weak manufacturing data in China and in the U.K.
The data “highlighted the fact that we still have global frailties,” said Matt Smith, an analyst with Summit Energy in Kentucky. But oil has had a good run this week and investors took the opportunity to take profits, he added.
China’s official Purchasing Managers’ Index slipped to 50.9 in June from 52.0 in May, just above the 50 mark that separates expansion from contraction, according to data released by the China Federation of Logistics and Purchasing and National Bureau of Statistics.
British manufacturing activity in June grew at its slowest pace in 21 months, with new orders declining for the second month in a row, the Markit/CIPS purchasing managers index for the sector showed Friday.
The index fell to 51.3 from a revised 52.0 in May. Economists had forecast a reading of 52.5.
The U.S. manufacturing index came to the rescue, however, stoking hopes of more demand for oil.
Prices had traded 1.8% lower before the Institute for Supply Management said its factory index rose to 55.3% in June, from 53.5% in May. Economists polled by MarketWatch had expected a decline.
In addition to profit-taking, oil was feeling the pinch of a stronger dollar, even as the U.S. unit moderated its gains. The greenback gained ground on Friday, with the dollar index DXY +0.01% standing at 74.368, up from 74.314 late Thursday.
Commodities are priced in dollars and usually trade inversely to the greenback. Read more on currencies.
The front-month contract had started its climb on Tuesday on expectations Greece would take steps to secure more financial aid. It also rallied Wednesday on a larger-than-expected drop in U.S. weekly inventories.
As expected, the Greek Parliament this week approved an austerity and passed laws to secure its application, all requirements to get aid from the European Union and the International Monetary Fund.
As part of the coordinated release of emergency oil reserves by members of the International Energy Agency announced last month, Germany is scheduled to release the stipulated 2.1 million barrels of crude oil for physical delivery beginning on Monday, analysts at J.P. Morgan said. The majority of the crude will be a heavier grade and will be sold at market prices, they added.
Also Friday, selling in Brent crude, the benchmark for Europe, was even heavier than in Nymex-traded oil. Brent for August delivery retreated $1.95, or 1.7%, to $110.52 a barrel on ICE Futures in London.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Sarah Turner is MarketWatch's bureau chief in Sydney.
