By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — Oil futures slipped during European trading hours on Monday, after data showed manufacturing activity weakened in China and as the dollar moved higher.
Oil futures for October delivery CLV2 +1.88% fell 11 cents, or 0.1%, to $96.38 a barrel in electronic trade.
On Friday, oil prices added 2% and closed out August with a 9.6% gain after U.S. Federal Reserve Chairman Ben Bernanke kept the door open for another round of quantitative easing to boost the economic recovery.
A stronger dollar, however added pressure on oil prices on Monday. The ICE dollar index DXY +0.07% , which measures the greenback against a basket of six rival currencies, rose to 81.318 from 81.242 in late North America trade on Friday.
Dollar-denominated commodities tend to fall on a firmer dollar, as they get more expensive for other currency holders.
Disappointing data from China also dragged oil prices lower. Both an official manufacturing activity survey and HSBC’s China manufacturing Purchasing Mangers’ Index showed conditions in the sector worsened, with the latter survey falling to a 41-month low. See: China factory index slumps to 41-month low: HSBC
The weak readings, however, fueled speculation that Beijing will soon act to bolster economy growth in the world’s second-largest economy.
“Speculation about stimulus measures to be taken by central banks should cause prices to rise during the course of the week despite gloomier economic prospects,” analysts at Commerzbank said in a note. “Hopeful of central bank measures, speculative financial investors are increasingly betting on rising prices and are thus contributing to the increase in prices,” they said.
Elsewhere in the energy complex, most commodities headed lower.
Gasoline for October delivery RBV2 +1.74% lost 0.4% to $2.96 a gallon, while heating oil for the same month HOV2 +1.27% fell 0.3% to $3.17 a gallon.
October natural gas NGV12 +1.46% gave up 0.5% to $2.78 per million British thermal units.
Sara Sjolin is a MarketWatch reporter, based in London.
