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Oil Adds To Gains After China Data

by Amwal Al Ghad English

Benchmark U.S. crude-oil futures extended their recent gains during electronic trading Thursday after weak Chinese manufacturing data raised hopes for fresh stimulus moves from Beijing.

Oil for October delivery CLV2 rallied 0.8%, or 79 cents, to $98.05 a barrel during Asian trading hours, adding to a 0.4% advance during the regular New York Mercantile Exchange session on Wednesday. Read more on Wednesday’s oil trade.

Crude futures took off after HSBC reported that a preliminary reading of its August manufacturing survey index put the figure at a nine-month low, with measures of shipments and new orders especially weak.

The numbers prompted some analysts to predict that Chinese officials would add stimulus to support the economy.

“Regarding policy impact, we expect the Chinese government to step up policy easing/stimulus after August,” said Bank of America Merrill Lynch economist Ting Lu. Read more on HSBC China manufacturing data.

The Nymex oil contracts advanced as high as $98.17 following the data, before easing.

Oil also enjoyed a boost from a falling U.S. dollar, as the ICE dollar index DXY  eased to 81.442, down mildly from 81.475 ahead of the data but well below the previous day’s 81.939 level.

The dollar had lost ground Wednesday after minutes from the Federal Reserve’s latest policy meeting showed higher odds that the central bank will take further measures to boost growth.

Other energy futures moved higher in tandem with crude.

Heating oil for September delivery HOU2 added 0.7% to $3.15 a gallon, while September gasoline RBU2 advanced 1.1% to $3.14 a gallon.

Natural gas for September delivery NGU2 tacked on 0.8% to $2.85 per million British thermal units, extending a 1.8% surge Wednesday.

Marketwatch

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