Crude futures weaken as US shows fresh signs of slowdown

16 May 2013 12:14  [Source: ICIS news]

LONDON (ICIS)--NYMEX crude oil futures fell by more than $1.00/bbl on Thursday following reports of a decline in US factory output in April.

By 10:07 GMT, the front-month June NYMEX WTI contract touched an intra-day low at $93.23/bbl, a loss of $1.07/bbl compared to the previous settlement, the contract then edged higher to trade around $93.55/bbl.

At the same time, the front-month June ICE Brent contract, which will settle by the close on Thursday, was trading around $103.40/bbl, having touched an intra-day low earlier at $102.95/bbl, a loss of 73 cents/bbl compared to the previous close.

US factory output fell in April by 0.40%, the third decline in four months according to the US Federal Reserve. The drop in manufacturing was across the board including the production of cars, car parts, electrical equipment, clothing and other products.

The weaker manufacturing sector implies that the US economy is showing fresh signs of a slowdown which is likely to have a negative impact on its demand for oil.

The weaker manufacturing sector in the US added further bearish sentiment but reflected similar slowdowns in other parts of the world.

Earlier this week, China posted April industrial production growth of 9.30%, which was lower than the 9.50% forecast. On 10 May, China posted below-forecast first quarter GDP of 7.70%, while forecasters were hoping for a figure around 8.00%.

Eurostat has confirmed that eurozone economies contracted by 0.20% in the first quarter while the broader 27-nation EU fared only marginally better with GDP falling by 0.10%.

Further pressuring the markets, US crude oil stocks for last week are expected to rise. The American Petroleum Institute (API) released its weekly stock report late on Tuesday showing crude stocks increased by 1.10m barrels to 390.20m barrels.

($1 = €0.78)

By: Kawai Wong
+44 20 8652 3214

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