BLBG:Oil Declines From One-Week High As Chinese Manufacturing Shrinks
Oil dropped in New York from the highest closing price in more than a week as manufacturing unexpectedly contracted in China and crude production resumed in the Gulf of Mexico after Hurricane Isaac.
Futures fell as much as 0.5 percent. China’s Purchasing Managers Index shrank for the first time in nine months in August, a government survey showed Sept. 1, stoking speculation the central bank may boost measures to stimulate growth. About 72 percent of crude output in the Gulf was shut, from 95 percent last week, according to the U.S. Bureau of Safety and Environmental Enforcement.
“The disappointing data from China emphasizes that waiting for central bank action is the name of the game,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt who predicts prices will stay above $90 a barrel this month. “Speculation of central bank intervention will keep prices supported despite bearish fundamentals of weak demand and abundant supplies.”
Crude for October delivery slid as much as 46 cents to $96.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.28 at 10:50 a.m. London time. The contract rose 2 percent on Aug. 31 to $96.47, the highest level since Aug. 22. Prices climbed 9.6 percent in August, a second monthly gain, and are down 2.6 percent this year.
Brent oil for October settlement decreased 4 cents to $114.54 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 9.2 percent last month. The European benchmark grade’s premium to West Texas Intermediate was at $18.26, compared with $18.10 on Aug. 31.
Uptrend Channel
Floor trading in New York will be closed for the U.S. Labor Day holiday today. Electronic trading will halt from 1:15 p.m. to 6 p.m. local time before resuming, exchange owner CME Group Inc. said on its website.
New York oil has technical support at $95.76 a barrel, along the bottom of an uptrend channel on the daily chart, according to data compiled by Bloomberg. This channel started from the 2012 intraday low of $77.28 on June 28. Buy orders tend to be clustered near chart-support levels.
China’s Purchasing Managers Index fell to 49.2 in August from 50.1 in July, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Sept. 1. The figure was below the estimates of 24 of the 25 analysts in a Bloomberg survey.
A separate measure by HSBC Holdings Plc and Markit Economics today showed the fastest contraction since March 2009. The final reading for the HSBC and Markit Economics report fell to 47.6 from a preliminary figure of 47.8 from Aug. 23. The dividing line between expansion and contraction for both surveys is 50.
Gulf Output
China should “decisively” expand the strength of its fine-tuning in accordance to the changes in the economy and markets, People’s Daily said in a front-page essay by an unidentified commentator. European Central Bank President Mario Draghi may unveil details of his bond-purchase program after a policy meeting Sept. 6.
Oil also fell amid signs that supply is increasing. Production in the Gulf of Mexico from undamaged platforms will resume immediately after checks have been completed, according to the U.S. Bureau of Safety and Environmental Enforcement. The equivalent of about 986,698 barrels a day of oil and 56 percent of daily gas output was offline as of 12:30 p.m. New York time yesterday, it said.
OPEC Output
Production among the Organization of Petroleum Exporting Countries slipped 75,000 barrels to an average 31.988 million barrels a day last month from a revised 32.063 million in July, according to a Bloomberg survey of oil companies, producers and analysts. Output in Iran fell 350,000 barrels to 2.75 million barrels a day, the lowest level since February 1990. Saudi Arabia, the biggest producer in OPEC, pumped 9.9 million barrels a day, unchanged from July.
Net-long positions in oil held by money managers, including hedge funds, commodity pools and commodity trading advisers, in the seven days ended Aug. 28 advanced 7.2 percent, to 192,471 futures and options combined, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Aug. 31.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
