Daily Comments
Crude futures close higher on China data and rallying stocks, brushing off bearish inventory data
02.09.2010 9:26:00
Light, sweet crude oil futures for October gained USD 1.99, or about 2.8%, to settle at USD 73.91/bbl. London Brent crude jumped USD 1.77 to end at USD 76.35.
Oil moved higher on Wednesday, rebounding after two days of declines, advancing almost 3% higher as robust manufacturing data from China and the US revived risk appetite and eased worries about flagging energy demand.
The US and Chinese data helped the market rebound despite yesterday’s EIA report that showed total US petroleum stockpiles soaring to 1.143 bn bbl, the highest inventory level since at least 1990, when the government began issuing weekly inventory data. In addition, distillate supplies fell 739,000 bbl, at odds with forecasts calling for an increase, and gasoline inventories fell 212,000 barrels, slightly more than expected.
The EIA's crude stock build was clearly bearish but the market ignored it since it found support from data showing new signs of growth in China, which means better oil demand going forward. China's purchasing managers' index (PMI) rose to 51.7 in August from 51.2 in July, official data showed, the 18th straight month it has been above the level of 50, which separates expansion from contraction.
The US manufacturing sector also grew faster than expected in August, chalking up a 13th straight month of expansion, helping to allay concerns that economic expansion is stagnating in the world's largest fuel user.
Price support also came for crude as the US dollar fell against major currencies, down nearly 1% against a basket of currencies after the upbeat manufacturing data calmed investors worried about the global economy, improving appetite for riskier assets.
US government storm trackers said a newly formed tropical depression in the eastern Atlantic Ocean would strengthen into Tropical Storm Gaston during the next 48 hours. But it was too early to tell if the system would move towards O&G installations in the Gulf of Mexico.
Powerful Earl and Tropical Fiona were both expected to veer north of the GoM into the Atlantic Ocean, computer models showed.
