TRD: OIL FUTURES : Crude Lower on Weak Chinese Manufacturing, U.S. Refinery Deal
By John M. Biers
After Friday's near-historic jump in prices, crude oil futures were lower again Monday following weak Chinese manufacturing data and news of the sale of a large East Coast U.S. refinery.
Front-month NYMEX crude futures were trading at $83.57 a barrel, off $1.39 or about 1.6%. The drop followed a feverish performance Friday, when NYMEX futures gained more than 9% after news of significant progress at a European Union summit.
Monday's trading is "somewhat of a hangover from what we saw," said Stephen Schork, head of the Schork Report, an energy research note.
The drop back to earth for oil came after the HSBC China Manufacturing Purchasing Managers Index fell for the eighth consecutive month to 48.2 compared with 48.4 in May, HSBC Holdings PLC said Monday. The official manufacturing PMI in June also fell to 50.2 from 50.4 in May, the China Federation of Logistics and Purchasing said Sunday.
U.S. manufacturing data expected later Monday could also fuel trading activity.
News that the Carlyle Group LP and Sunoco Inc. (SUN) had struck a deal to keep open a large Philadelphia-area refinery also helped push prices lower, Mr. Schork said.
Under the terms of the deal, which is expected to be announced Monday morning, Carlyle will take over operations of the facility and gain a controlling stake in the joint venture that will own it, said people close to the negotiations. The facility can process up to 335,000 barrels of crude a day.
The refinery under Carlyle is expected to become a major new user of the domestic crude that has backed up at an Oklahoma trading hub unable to reach coastal refineries. The Philadelphia refinery could begin processing U.S. crude by the beginning of next year, increasing its demand over time, said the people familiar with the matter. That would help U.S. oil producers and could help reduce the price difference between global and U.S. oil, which stands at nearly $13.
Since the announcement, prices of reformulated gasoline blendstock, or RBOB, have retreated about 1.8%.
Mr. Schork, who lives in Villanova, Penn., praised the development as a positive for U.S. consumers. He also noted that, "gasoline can certainly lead the crude market."
--Ryan Dezember in New York and Yue Li in Shanghai contributed to this article.
