By V. Phani Kumar, MarketWatch
HONG KONG (MarketWatch) — Crude-oil futures rose slightly on mild buying after a struggle in electronic trading Tuesday, a day after the commodity suffered hefty losses, with improved manufacturing data from China countering mounting worries over Europe.
Light, sweet crude-oil futures for September delivery CLU2 +0.36% traded on the New York Mercantile Exchange’s Globex platform were up 11 cents at $88.25 in Tokyo afternoon trade.
The front-month contract was choppy in a range between $87.78 and $88.59.
Trading volumes were thin, possibly reflecting indecision after selling took a heavy toll on energy and stock prices overnight.
In the regular Nymex session on Monday, the benchmark crude contract plunged $3.69, or 4%, for its largest one-day percentage decline since Dec. 14, as traders fretted about the demand outlook for crude oil against the backdrop of Europe-related economic gloom.
“We see the market as having priced in lackluster macroeconomic growth and below-trend petroleum demand growth on the order of 1% for this year and next, but not a more dramatic bearish scenario,” Citi Futures analyst Tim Evans wrote in a report.
Following a report in German magazine Der Spiegel that the International Monetary Fund was set to stop aid payments to Greece, the IMF issued a statement saying it supports the European country in “overcoming its economic difficulties.”
Keeping euro-zone economic troubles in the spotlight, Moody’s Investors Service said late Monday in the U.S. that it had lowered its outlook on the triple-A rating of Germany, the euro-zone’s largest economy, due to mounting uncertainties related to the region’s sovereign-debt crisis. Read more about Moody’s action.
But helping to improve investor sentiment a little, a preliminary HSBC gauge of China’s manufacturing Purchasing Managers’ Index for July climbed to its highest level in five months. Read full story on HSBC’s flash China PMI for July.
Oil’s mild gains coincided with slightly higher U.S. equity index futures, with Dow Jones Industrial Average DJIA -0.79% futures up 8 points, or 0.1%, to 12,653.
The gain also came ahead of weekly U.S. petroleum inventory data, with the American Petroleum Institute due to report its figures later in the global day.
Citi Futures’ Evans said the weekly inventory data will be “the next test” for crude, adding that a seasonal 1 million to 2 million barrels’ fall in crude stocks was anticipated for the week ended July 20.
Helping limit further gains for oil, however, the ICE dollar index DXY +0.06% climbed to 83.699, from 83.640 in North American trade late on Monday.
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
