Crude-oil futures pulled
back on Tuesday, giving up some of the strong gains seen in the last three
sessions, as worries about China’s economy resurfaced.
On the New York Mercantile
Exchange, light, sweet crude futures for delivery in October traded at $48.35 a
barrel at 1025 GMT, down 1.73%. October Brent crude on London’s ICE Futures
exchange fell 1.9% to $53.12 a barrel.
Official and private gauges
of Chinese manufacturing activity in August slid to multiyear lows, indicating
that the country’s sluggish economy was continuing to contract. This led to
market jitters and profit-taking as China is the second-largest global consumer
of oil.
After years of economic
boom, the Asian powerhouse is slowing as it tries to switch gears from an
investment-led economy to one which is consumer-driven.
"The China PMI numbers
today have just reminded people of the China weakness story,” said Julian
Jessop, head of commodities research at Capital Economics. "But you have to see
the small fall today in the context of the much bigger rises over the previous
three days.”
Brent, the global
benchmark, gained more than 25% in the last three days, while WTI, the U.S.
benchmark, gained 27%.
The cheer was helped by
comments on Monday from the Organization of the Petroleum Exporting Countries
which indicated the organization would consider cutting output to shore up oil
prices, as well as signs of a decline in U.S. oil production.
After the slump at the
beginning of last week, Nymex crude prices rebounded sharply to finish up 4.4%
in August, while Brent crude gained 3.7%.
Most analysts were unmoved
by the OPEC announcement, however, and said it would remain business as usual
for the 12-nation oil cartel which has so far refused to slash production in
the face of a severe price rout.
"There’s no change in
policy whatsoever,” said Amrita Sen, an oil analyst at Energy Aspects. "This is
something they’ve said for a long time [and] it doesn’t signify anything.”
Despite Tuesday’s weak
manufacturing data, some analysts have pointed out that China will still need
plenty of oil. The Asian giant’s imports are expected to maintain rapid growth
into 2016, driven by strong stockpiling for its emergency reserves and the
lifting of import restrictions for its so-called "teapot” refineries, analyst
Ivan Szpakowski at Citi Research said in a note.
"Such stockpiling is headed
for a record year, and with the further decline in prices over the past two
months, China may turn to overseas facilities to boost its stockpiling
program,” Mr. Szpakowski said.
Looking ahead, a swath of
U.S. data is due out later Tuesday, including Initial weekly U.S. oil inventory
data.
Nymex reformulated gasoline
blendstock for October—the benchmark gasoline contract—fell 2.5% to $1.4615 a
gallon, while October diesel traded at $1.6664, down 2.1%.
ICE gasoil for September
changed hands at $503.50 a metric ton, up $17.75 from Monday’s settlement.
(
Wall
Street Journal)