Weak manufacturing data from China dragged the price of oil down close to $107 a barrel today as traders awaited confirmation of a report showing another decline in U.S. crude supplies.
By early afternoon in Europe, benchmark crude for September delivery was down 10 cents at $107.13 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 29 cents to settle Tuesday at $107.23.
A HSBC survey released today showed China’s manufacturing at an 11-month low this month, a disappointing performance that puts pressure on Chinese leaders to reverse a deepening slowdown in the world’s second-largest economy.
“A further slowdown in the manufacturing sector added to investor unease ... putting further pressure on labor markets and reinforcing the pessimistic outlook for demand growth” in China, said a note from Sucden Financial Research in London.
The U.S. government’s weekly report on America’s inventories of crude — the market benchmark — is due later today and is expected to show another drop in supplies. Falling supplies have helped propel the price of oil to a 16-month high this month, boosting gasoline prices as well.
A survey by Platts, the energy information arm of McGraw-Hill Cos., showed analysts expect a decline in crude oil inventories of 2.6 million barrels for the week ended July 19. That would bring the four-week drop to nearly 30 million barrels.
A report released late Tuesday by the American Petroleum Institute, funded by the oil industry, showed figures in line with analysts’ forecasts.
“The API poll forecast a 2.5 million barrel decrease in crude inventories for the week, with stocks at Cushing continuing to display significant drawdowns, dropping by 2.1m barrels, as new pipelines ease supply bottlenecks,” Sucden Financial said.
Cushing, Oklahoma, is the trading and storage hub for West Texas Intermediate, the crude oil grade behind the Nymex contract.
Brent crude, traded on the ICE Futures exchange in London, was down 57 cents to $107.85 a barrel.
In other energy futures trading on the Nymex:
— Wholesale gasoline lost 0.26 cents to $3.0264 a gallon.
— Heating oil retreated 1.06 cents to $3.0619 a gallon.
— Natural gas fell 2.8 cents to $3.715 per 1,000 cubic feet.