BLBG:Oil Declines From One-Week High as China Manufacturing Weakens
Crude slipped from the highest close in a week in New York as manufacturing contracted unexpectedly in China, raising speculation that fuel demand may decline in the world’s second-biggest crude consumer.
Futures slid as much as 1 percent after capping the biggest quarterly gain since December on Sept. 28. China’s Purchasing Managers’ Index was 49.8 in September, the government said today. That compares with the median forecast of 50.1 in a Bloomberg survey. An index from HSBC Holdings Plc and Markit Economics showed an 11th contraction. Data released later today will probably show U.S. output shrank a fourth month.
“All indicators point toward a controlled and orderly landing of the Chinese economy,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark, who predicts Brent crude will average $112 a barrel this quarter. “On average, we see prices ending the year at roughly the same level as now, but there are some wild cards.”
Crude for November delivery fell as much as 93 cents to $91.26 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.59 at 12:19 p.m. London time. It climbed 0.4 percent on Sept. 28 to $92.19, the highest close since Sept. 21. Prices rose 8.5 percent in the third quarter.
Brent for November settlement dropped 77 cents to $111.62 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to Nymex crude was at $20.03, little changed from a six-week closing high of $20.20 reached on Sept. 28.
Brent Forecast
Bank of America Corp. said that Brent crude may advance to $120 a barrel by the end of the year, and raised its fourth- quarter forecast for the oil benchmark by $6, citing stronger prospects for the global economy.
Risks to world growth have been eased by stimulus measures taken by central banks, analysts including Francisco Blanch in New York and Sabine Schels in London said in a report. Bank of America bolstered its fourth-quarter estimate for the grade to $114 a barrel from $108.
Oil’s decline in New York may stall along its 100-day moving average, at $90.10 a barrel today, according to data compiled by Bloomberg. Futures last week rebounded after falling to this indicator. Buy orders tend to be clustered near technical-support levels.
Chinese Manufacturing
China’s manufacturing shrank for a second month for the first time since 2009, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today. The report added to signs that growth is at risk of reaching a 22- year low as the ruling Communist Party prepares to begin installing a new generation of leaders next month.
“China PMI was not so good,” said Ken Hasegawa, a sales manager at Newedge Group in Tokyo. “Eleven straight months of negative numbers has had some bearish impact on oil prices.”
OPEC production fell the most in 18 months in September, led by reductions in Angola and Nigeria, a Bloomberg survey showed. Output in the 12-member Organization of Petroleum Exporting Countries slipped 454,000 barrels, or 1.4 percent, to an average 31.979 million barrels a day last month from a revised 32.433 million in August, according to the survey of oil companies, producers and analysts.
Money managers reduced wagers on rising prices for the first time in six weeks, cutting net-long positions by 17 percent in the seven days ended Sept. 25, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Sept. 28. It was the biggest reduction since May 8.
In London, hedge funds and other speculators reduced bullish bets on Brent crude to their lowest level in more than a month in the week ended Sept. 25, according to data from ICE Futures Europe.
Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 107,127 lots, the London-based exchange said today in its weekly Commitment of Traders report. That’s a reduction of 837 contracts from 107
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
