MW: Oil rises as economic data buoy demand outlook
By Myra P. Saefong and Michael Kitchen, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures moved higher on Thursday, as upbeat economic data from the U.S., China and the euro zone buoyed the outlook for oil demand ahead of a weekly U.S. government update on petroleum supplies.
Crude oil for March delivery CLH3 +0.65% rose 88 cents, or 0.9%, to $96.11 a barrel on the New York Mercantile Exchange, rebounding from a 1.5% drop on Wednesday.
Meanwhile, Brent crude for March UK:LCOH3 -0.08% was down 16 cents at $112.64, further narrowing the spread between the New York and London benchmarks.
The gains for Nymex crude came after the preliminary reading of a monthly HSBC survey of Chinese manufacturers showed further improvement for the sector.
HSBC’s “flash” manufacturing Purchasing Managers’ Index hit a 24-month high of 51.9, rising from a reading of 51.5 in December. See: China factory activity improves further in January.
Given China’s large appetite for oil, its economy serves as a key focus for energy-futures investors, as GFT Markets Technical Analyst Fawad Razaqzada noted in comments ahead of Thursday’s supply data.
“Fundamentally oil remains bid, thanks, in part, to the recent upturn in Chinese data. This has boosted demand expectations from the world’s second largest consumer of oil,” Razaqzada wrote.
An uptick in PMI for the euro zone further underpinned oil prices. The Markit composite PMI showed private-sector activity across the struggling region contracted at a slower pace in January, with the index rising to 48.2 from 47.2 in December, beating economists’ expectations. See: Euro-zone PMI signals downturn eased in January
In the U.S. the preliminary flash manufacturing purchasing managers index rose to a 56.1 reading in January from 54.0 in December, according to a Markit report Thursday. That was the strongest rate of growth since March 2011. See: Jan. flash manufacturing PMI at 22-month high.
Nymex crude’s advance Thursday came in the face of several headwinds, including a stronger U.S. dollar.
The ICE dollar index DXY +0.03% advanced to 79.965 Thursday, up from late Wednesday’s 79.938. A rising dollar often depresses oil prices as it makes the commodity more expensive to holders of other currencies.
The gains also followed a larger-than-expected build in U.S. crude-oil inventories reported by the American Petroleum Institute late Wednesday.
The API report showed crude supplies for the week ended Jan. 18 rose by 3.2 million barrels, above expectations for a 2 million-barrel climb from a Platts survey of analysts. See: Oil supplies up, but gasoline supplies fall.
Attention now turns to the U.S. Energy Information Administration’s own weekly inventory report due out at 11 a.m. Eastern, generally seen as more definitive.
“We expect a mildly bearish reading that could still weigh on prices a little before the end of the week,” said Andrey Kryuchenkov, commodity analyst at VTB Capital in a note.
“Crude imports into the U.S. will likely gain from the week before, helping a potential build in total U.S. crude stockpiles,” he said.
Among other energy futures, February gasoline RBG3 -0.30% lost 0.5 cent, or 0.2%, to $2.83 a gallon, while heating-oil HOG3 +1.31% for the same month was almost flat at $3.08 a gallon.
February natural gas rose 1 cent, or 0.3%, to $3.57 per million British thermal units.
The EIA will also issue its weekly report on natural-gas supplies at 10:30 a.m. Eastern. Analysts polled by Platts expected to see a decline of between 173 billion cubic feet and 177 billion for the week ended Jan. 18.
