NEW YORKâCrude-oil futures moved higher after tumbling nearly $5 a barrel in the previous two days on renewed worries of economic weakness in the euro zone.
Light, sweet crude oil for September delivery was 51 cents higher, at $88.65 a barrel on the New York Mercantile Exchange and moving in a wide near-$1.50 range since Monday's settlement. Crude prices fell 4% on the euro-zone weakness on Monday and have dropped nearly $5 a barrel over Friday and Monday after last week hitting the highest levels since mid-May.
September North Sea Brent crude oil futures on the IntercontinentalExchange was 53 cents higher, at $103.79 a barrel, after falling $3.57 a barrel on Monday, the biggest single-day decline since mid-December.
"There are fears of an acute slowdown in Europe," said Peter Donovan, vice president and oil trader at Vantage Trading. "We've been hit hard, so to see us come back a little bit isn't much."
Markit Economics' preliminary purchasing managers index for the euro zone was unchanged at 46.4 in July, indicating a sixth-consecutive month of contraction. In Germany, the preliminary July PMI fell to 47.3 from 48.1 in June.
That news followed Moody's Investors Service's move late Monday to dim its outlook for Germany amid worries of a breakup of the euro zone and new worries about Spain's viability after investors fled the nation's bonds.
Traders said the euro-zone worries are stifling a stronger market reaction to signs of a tentative rebound in China's economy. China's purchasing managers index rose to a five-month high in July of 49.5 from 48.2 in June, but a reading below 50 still indicates weakness.
China is the engine of growth for the global oil market, expected to account for 300,000 barrels a day of the world-wide rise in 2012 oil demand of 800,000 barrels a day, according to an International Energy Agency forecast.
"You've got the two big forces at play here: a geopolitical mess and risk of supply disruption in the Middle East and the European fears," said Vantage's Mr. Donovan.
"The guys were pretty 'bulled up' last week," he said, after Israel threatened to retaliate against Iran, accusing it of being behind a suicide bombing that killed five [Israelis] in Bulgaria. "But the euro-zone worries don't go away." Mr. Donovan said Israel action against Iran would stir concerns over free-flowing oil supplies in the vital Middle East.
The market will be watching for U.S. oil inventory data in coming days for direction. Early expectations from analysts surveyed by Dow Jones Newswires call for the Energy Information Administration to show crude stocks fell 200,000 barrels, while refiners cut runs by 0.6 percentage point from a week earlier. Gasoline stocks are expected to drop by 100,000 barrels, while distillate stocks, including diesel and heating oil, rose by 600,000 barrels. The EIA report is due at 10:30 a.m. EDT Wednesday.
August-delivery heating oil was 0.18 cent higher, at $2.8207 a gallon, while August reformulated gasoline blendstock futures were down 1.28 cent, at $2.8701 a gallon.
