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Oil Drops a Fourth Day on China Manufacturing, Rising Stockpiles

By Afolabi Ogunde on September 20, 2012

Oil Prices

Oil dropped for a fourth day in New York after a Chinese-manufacturing gauge contracted and U.S. data showed stockpiles climbed the most since March, signaling an easing of fuel demand in the world’s biggest crude users.

Futures fell as much as 1.2 percent, extending yesterday’s 3.5 percent drop in the longest losing streak since June. China’s manufacturing may contract for an 11th month in September, a survey showed today. U.S. oil inventories surged by 8.5 million barrels last week after output and imports rebounded as companies reopened platforms in the Gulf of Mexico after Hurricane Isaac, Energy Department data showed yesterday. They were forecast to rise 1 million barrels, according to a Bloomberg News survey.

“China’s PMI is a factor for the decline,” said Ken Hasegawa, a sales manager at Newedge Group in Tokyo who forecasts West Texas Intermediate crude will drop to $85 by the end of November. “The sharp drop in New York time yesterday will have impacts in Asia time and continue the weak mood.”

Oil for October delivery decreased as much as $1.10 to $90.88 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.01 at 1:02 p.m. Singapore time. The contract, which expires today, slid $3.31 yesterday to $91.98, the lowest close since Aug. 3. The more-active November future was at $91.37 a barrel, down 93 cents. Front-month prices are 8 percent lower this year.

Brent oil for November settlement fell 38 cents to $107.81 a barrel on the London-based ICE Futures Europe exchange. It dropped $3.84, or 3.4 percent, to $108.19 yesterday. The front- month European benchmark grade’s premium to the corresponding West Texas Intermediate contract was at $16.56. It closed at $15.89 yesterday, the narrowest since July 26.

Source: Bloomberg