Oil market diverges on Chinese data, US demand fears
Global oil prices diverged on Thursday, holding close to recent lows, as traders balanced upbeat Chinese economic data against stubborn worries over weak US crude demand.
London: Global oil prices diverged on Thursday, holding close to recent lows, as traders balanced upbeat Chinese economic data against stubborn worries over weak US crude demand.
The price of Brent North Sea crude for December delivery dipped 16 cents to stand at USD 107.64 a barrel in London midday deals.
New York`s main contract, West Texas Intermediate (WTI) for delivery in December, rose 28 cents to USD 97.14 a barrel.
The market had hit multi-month lows on Wednesday after a US oil inventory report showed a surprisingly large build in supplies, sparking concern over weakening demand in the world`s top crude consumer.
New York crude sank to USD 96.16, which was the lowest level since July 1. Brent oil dived to USD 107.35, reaching a point last seen on October 1.
However, crude futures steadied on Thursday after encouraging manufacturing data in China, which is the world`s top consumer of energy.
China`s manufacturing activity hit a seven-month high in October, adding to evidence the world`s second-largest economy is recovering, data showed.
"Price losses were capped with positive economic data released from China overnight," said analyst Lucy Sidebotham at British energy consultancy Inenco.
"China`s manufacturing sector has expanded at the fastest rate in 7 months so far in October, providing upside to oil prices."
Data published on Thursday by HSBC showed the bank`s preliminary Chinese purchasing managers` index (PMI) for this month was 50.9, a significant improvement from September`s 50.2 and the highest since 51.6 in March.
The index tracks manufacturing activity in China`s factories and is a closely watched gauge of the health of the economy. A reading above 50 indicates growth, while anything below signals contraction.
The oil market took a knock on Wednesday after the US government`s Department of Energy weekly survey showed that American crude reserves had soared by 5.2 million barrels in the week ending October 18, easily outstripping expectations.
The increase also came on the heels of a report on Monday, delayed by the partial US government shutdown, that showed crude inventories had swelled by 4.0 million barrels in the previous week to October 11.
New York crude futures had also fallen on Tuesday, dented by news that the US economy added 148,000 jobs last month -- far less than the 183,000 forecast -- stoking demand concerns.
Later on Thursday, at 1230 GMT, market participants will digest weekly US jobless claims data.