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Oil Drops Below $94 On Weak China Data

by Amwal Al Ghad English

Weak Chinese manufacturing data and a drop in Asian stocks helped send oil futures lower in electronic trade Thursday.

Crude for July delivery  fell over $1 or 1.2% to $93.18 a barrel, after preliminary results from HSBC’s monthly survey of Chinese factory activity showed an unexpected contraction.

London-traded Brent crude oil for July delivery   surrendered 91 cents, or close to 1%, to $101.69 a barrel.

HSBC’s “flash” Purchasing Managers’ Index for May fell to a seven-month low of 49.6, down from April’s final reading of 50.4. Asian stocks fell sharply after the data, with the main indexes in Hong Kong, Sydney and Taipei all more than 1% lower.

In Japan, volatility in the government bond market prompted central-bank action and sent the Nikkei Stock Average  tumbling 7.3% by the close, the worst one-day loss since March 2011.

The loss for oil extended the futures’ mugging on Wednesday, when the New York Mercantile Exchange floor session saw July crude plunging 2%, while the Brent contract retreated 1.3%.

The sell-down Wednesday followed statements from Federal Reserve Chairman Ben Bernanke and the latest Fed policy-meeting minutes showed the U.S. may soon begin winding down its aggressive bond-buying program if the economy improves further.

The signal from the Fed send the dollar climbing, though on Thursday the greenback stabilized, with the ICE dollar index  at 84.248, little changed from late Wednesday’s 84.251

In other energy-futures trade, natural gas for June delivery  managed to add 3 cents, a 0.7% gain, to sell for $4.21 per million British thermal units.

The advance extended the contract’s climb in recent sessions on the back of forecasts for warmer-than-usual weather.

June gasoline  held steady at $2.82 a gallon.

Marketwatch

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