On Tuesday morning crude oil futures rebounded following overnight declines, aided by upbeat Chinese manufacturing data. Brent recovered from a one-week low after the manufacturing gauge beat forecasts, hinting at a boost in demand from the world's second-biggest oil consumer. In New York West Texas Intermediate traded higher.
Oil futures gained as much as 0.6 percent in London. For September, a preliminary Purchasing Managers' Index for China from HSBC Holdings Plc and Markit Economics was at 50.5, higher than a Bloomberg News survey's median estimate of 50 and a final reading of 50.2 for August, according to Bloomberg.
On the New York Mercantile Exchange, light, sweet crude futures for November delivery traded higher at $91.30 a barrel, up $0.43 in the Globex electronic session. The October contract expired yesterday, declining at $91.52, down 1 percent at the lowest settlement for front-month futures since May 2013. November Brent crude on London's ICE Futures exchange traded higher $0.30 to $97.27 a barrel, reports Market Watch.
Frank Klumpp, an analyst at Landesbank Baden-Wuerttemberg, said by phone from Stuttgart, Germany said, "We don't see a hard landing in China this year. Even if we get some negative surprise from China, the demand side is less important for the market now than the supply side," according to Bloomberg.
Demand for oil in China showed an improvement in August, rebounding from the first half of the year's declining trend. The country's apparent oil demand is a measure of domestic demand after accounting for changes in inventory. Analyst Ivan Szpakowski at Citi Research said this climbed by 1 percent in August from July, with year-on-year growth looking more positive, reports Market Watch.
The flash PMI showed that export demand has possibly been helping China's economy stay stronger during the property slump, eliminating some of the pressure on the government to ease measures. According to Bloomberg, the International Energy Agency in Paris said China will be responsible for approximately 11 percent of global oil consumption this year, lower than the 21 percent for the U.S.
The U.S. and Middle East allies bombed Islamic State positions in Syria, a new part of President Barack Obama's effort to eliminate the group that has taken over Iraqi territory. The U.S. military and allied nations flew fighter jets, bomber aircraft and Tomahawk missiles through Syria to attack the Islamic State targets as a part of a continued operation. The Pentagon's press secretary Rear Admiral John Kirby reported that this operation was "ongoing" in an e-mailed statement yesterday. Investors took note of this, as Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries, is one of Syria's close neighbors, according to Bloomberg.
According to a Bloomberg survey before data from the Energy Information Administration tomorrow showed U.S. gasoline stockpiles most likely fell to their second weekly decline by 300,000 barrels to 210.4 million barrels in the week ended Sept. 19. Distillate inventories, such as heating oil and diesel, are forecasted to have grown by 350,000 barrels, while crude supplies may have increased by 750,000 barrels.
Saudi Oil Minister Ali al-Naimi on Monday downplayed concerns over the effect of declining crude oil prices, which had caused recent speculation that the Organization of the Petroleum Exporting Countries could lower its oil output, reports the Economic Times.
Nymex reformulated gasoline blendstock for October, the benchmark gasoline contract, gained 93 points to $2.5940 a gallon, while October diesel rose to $2.6926, 55 points higher, according to Market Watch.
Supply data will be published today by the American Petroleum Institute in Washington. The industry group gathers information from refinery operators, bulk terminals and pipelines. The government requires that reports be filed with the Energy Information Association.
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