Oil prices stall following lackluster China data
- Article by: PABLO GORONDI
- Associated Press
- January 23, 2014 - 6:40 AM
The price of oil hovered around $96 a barrel Thursday, with gains capped by lackluster economic data from China and a report of rising U.S. stockpiles of crude.
By early afternoon in Europe, benchmark U.S. crude for March delivery was up 8 cents at $96.11 a barrel in electronic trading on the New York Mercantile Exchange.
A preliminary manufacturing index for China fell to 49.6 in January, below the 50 level that signifies expansion and a six-month low, according to HSBC and Markit Economics. That suggests demand will drop in the world's second-largest economy.
That was echoed in a report by the American Petroleum Institute, which said U.S. crude stocks rose 4.9 million barrels last week. Analysts polled by Platts, the energy information arm of McGraw-Hill Cos., had predicted a draw of 1.9 million barrels. The report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
If the stock build is confirmed, it would be the first rise in eight weeks.
The reports put a dent in market sentiment, which had been buoyant on Wednesday, when the Nymex contract rose $1.76 to $96.73 following the opening of the southern leg of the Keystone pipeline, which is expected to eventually bring up to 700,000 barrels of crude oil a day to the Gulf Coast. With demand expected to rise, the price of the U.S. oil rose closer to that of more-expensive imports.
Brent crude, a benchmark for international oils, was down 22 cents to $108.05 a barrel on the ICE Futures exchange in London.
Natural gas futures continued their steep rise, up 18.1 cents to $4.87 per 1,000 cubic feet, as temperatures in many parts of the U.S. Northeast remained in the single digits, boosting demand.
The deep chill blanketing much of the central and eastern U.S. is expected to keep demand high following a big snowstorm on Tuesday.
"The most recent cold snap in the U.S. Midwest had already brought about a sharp decline in U.S. natural gas stocks, which currently find themselves 15 percent below the five-year average," said a note to clients from analysts at Commerzbank in Frankfurt. "In the short term, natural gas can thus be expected to continue to rise."
In other energy futures trading on Nymex:
— Wholesale gasoline lost 0.38 cent to $2.6844 per gallon.
— Heating oil was down marginally to $2.9811 a gallon.
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