BLBG: Brent Crude Slips as Manufacturing Slows From China to EU
Brent crude dropped as measures of Chinese and European manufacturing slowed, a sign that fuel demand may weaken. West Texas Intermediate was little changed.
A Chinese Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics slid to 50.3 this month, missing the 51.5 projected in a Bloomberg survey. Euro-area manufacturing and services activity slowed in August, a preliminary report showed today. The spread between WTI and Brent grew to the widest in two months yesterday after supplies at Cushing, Oklahoma, the delivery point for the U.S. benchmark, surged.
“Worries about global economic growth are hurting oil,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $2.6 billion, said by phone. “The Chinese PMI at just above 50 isn’t encouraging.”
Brent for October settlement decreased 66 cents, or 0.7 percent, to $101.62 a barrel on the London-based ICE Futures Europe exchange at 9:13 a.m. in New York. The volume of all futures traded was 2.5 percent below the 100-day average for the time of day.
WTI for October delivery fell 1 cent to $93.44 a barrel at on the New York Mercantile Exchange. The September contract rose 1.7 percent to expire at $96.07 yesterday. Volumes were 18 percent lower than the 100-day average.
Spread Widens
The U.S. benchmark grade traded at an $8.18 discount to Brent. The spread between the contracts closed at $8.83 yesterday, the most since June 19. The diverging price structures of the two markets mean spreads are wider for later months. November WTI traded at $9.67 discount to Brent.
The Chinese manufacturing gauge trailed all 22 forecasts in the Bloomberg survey of economists. It’s down from a final reading of 51.7 for July and, if confirmed on Sept. 1, will be the lowest in three months. Numbers above 50 signal expansion.
China will account for about 11 percent of global oil demand this year, compared with 21 percent for the U.S., according to the Paris-based International Energy Agency.
Crude supplies at Cushing climbed 1.76 million barrels last week, the biggest gain since October, the Energy Information Administration reported yesterday. Nationwide crude stockpiles shrank by 4.47 million barrels through Aug. 15, the most in five weeks, according to the Energy Department’s statistical arm.
Brent has technical support along its lower Bollinger Band, according to data compiled by Bloomberg. Futures halted an intraday drop yesterday near this indicator, at about $101.25 a barrel today. Buy orders tend to be clustered around chart-support levels.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net Stephen Cunningham
