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Oil ends higher on upbeat US, China data
Source: Agencies |
September 2, 2010, Thursday
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OIL rose yesterday, rebounding after two days of declines to finish nearly 3 percent higher as strong manufacturing data from China and the United States revived risk appetite and eased worries about flagging energy demand.
The US and Chinese data helped the market rebound despite a US Energy Information Administration (EIA) report that showed total US petroleum stockpiles soaring to 1.143 billion barrels, the highest inventory level since at least 1990, when the government began issuing weekly stocks data.
"The EIA's crude stock build is bearish but the market is ignoring it because earlier today, it found support from data showing new signs of growth in China, which means better oil demand going forward," said Mark Waggoner, president at Excel Futures in Bend, Oregon.
Benchmark US crude oil futures for October rose US$1.99, or about 2.8 percent to settle at US$73.91 a barrel.
The rebound came after oil futures ended August down more than US$7, as inventories swelled and the demand outlook dimmed with gloomy US economic data. The decline of almost 9 percent was the biggest monthly percentage decline since May.
London ICE Brent crude futures rose US$1.77 to end at US$76.35.
China's purchasing managers' index (PMI) rose to 51.7 in August from 51.2 in July, official data showed, the 18th straight month it has been above the level of 50, which separates expansion from contraction.
The US manufacturing sector also grew faster than expected in August, chalking up a 13th straight month of expansion, helping to calm fears that economic growth was stagnating in the world's largest fuel user.
The data boosted investor confidence and Wall Street stocks rose 2 percent, on track for the strongest daily gain in eight weeks. A broad array of commodities also rose.
The EIA reported that US crude stockpiles rose 3.4 million barrels in the week to August 27, as refineries pared utilization rates. The gain was larger than forecast, but much lower than the 4.8 million barrel rise reported on Tuesday by the industry group American Petroleum Institute.
Distillate supplies fell 739,000 barrels, going against forecasts for an increase, and gasoline inventories declined 212,000 barrels, slightly more than expected, EIA data showed.
The large build in US total crude stockpiles could deepen the contango in crude markets, when front month futures trade at a discount to later months, another sign of weak demand in the giant US market. (http://link.reuters.com/qet58n )
The spread between the first- and second-month crude oil contracts ended at US$1.50, narrowing from US$1.60 on Tuesday, which was the widest level since early June.
The US dollar fell against major currencies after the upbeat manufacturing data calmed investors worried about the global economy, improving appetite for riskier assets.
In late trading, the greenback was down 0.82 percent against a basket of currencies.
The euro gained as European shares rose at their fastest pace in three months after fears eased over a renewed global slowdown, another supportive factor for oil prices.
Crude oil supply from the Organization of Petroleum Exporting Countries fell in August to the lowest level since November 2009 as output from Nigeria, the United Arab Emirates and Iraq declined, according to a monthly survey.
US government storm trackers said a newly formed tropical depression in the eastern Atlantic Ocean would strengthen into Tropical Storm Gaston during the next 48 hours. But it was too early to tell if the system would make its way to the oil-rich Gulf of Mexico.
Powerful Hurricane Earl and Tropical Storm Fiona were both expected to march northerly in the Atlantic, off the US East Coast, computer models showed.
The US and Chinese data helped the market rebound despite a US Energy Information Administration (EIA) report that showed total US petroleum stockpiles soaring to 1.143 billion barrels, the highest inventory level since at least 1990, when the government began issuing weekly stocks data.
"The EIA's crude stock build is bearish but the market is ignoring it because earlier today, it found support from data showing new signs of growth in China, which means better oil demand going forward," said Mark Waggoner, president at Excel Futures in Bend, Oregon.
Benchmark US crude oil futures for October rose US$1.99, or about 2.8 percent to settle at US$73.91 a barrel.
The rebound came after oil futures ended August down more than US$7, as inventories swelled and the demand outlook dimmed with gloomy US economic data. The decline of almost 9 percent was the biggest monthly percentage decline since May.
London ICE Brent crude futures rose US$1.77 to end at US$76.35.
China's purchasing managers' index (PMI) rose to 51.7 in August from 51.2 in July, official data showed, the 18th straight month it has been above the level of 50, which separates expansion from contraction.
The US manufacturing sector also grew faster than expected in August, chalking up a 13th straight month of expansion, helping to calm fears that economic growth was stagnating in the world's largest fuel user.
The data boosted investor confidence and Wall Street stocks rose 2 percent, on track for the strongest daily gain in eight weeks. A broad array of commodities also rose.
The EIA reported that US crude stockpiles rose 3.4 million barrels in the week to August 27, as refineries pared utilization rates. The gain was larger than forecast, but much lower than the 4.8 million barrel rise reported on Tuesday by the industry group American Petroleum Institute.
Distillate supplies fell 739,000 barrels, going against forecasts for an increase, and gasoline inventories declined 212,000 barrels, slightly more than expected, EIA data showed.
The large build in US total crude stockpiles could deepen the contango in crude markets, when front month futures trade at a discount to later months, another sign of weak demand in the giant US market. (http://link.reuters.com/qet58n )
The spread between the first- and second-month crude oil contracts ended at US$1.50, narrowing from US$1.60 on Tuesday, which was the widest level since early June.
The US dollar fell against major currencies after the upbeat manufacturing data calmed investors worried about the global economy, improving appetite for riskier assets.
In late trading, the greenback was down 0.82 percent against a basket of currencies.
The euro gained as European shares rose at their fastest pace in three months after fears eased over a renewed global slowdown, another supportive factor for oil prices.
Crude oil supply from the Organization of Petroleum Exporting Countries fell in August to the lowest level since November 2009 as output from Nigeria, the United Arab Emirates and Iraq declined, according to a monthly survey.
US government storm trackers said a newly formed tropical depression in the eastern Atlantic Ocean would strengthen into Tropical Storm Gaston during the next 48 hours. But it was too early to tell if the system would make its way to the oil-rich Gulf of Mexico.
Powerful Hurricane Earl and Tropical Storm Fiona were both expected to march northerly in the Atlantic, off the US East Coast, computer models showed.
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