20 June 2013 07:58 [Source: ICIS news]
SINGAPORE (ICIS)--Crude prices fell by more than $1.00/bbl on Thursday, after US Federal Reserve said it may scale back stimulus measures and on concerns over China’s manufacturing sector following the release of downbeat PMI data .
At 06:28 GMT, August Brent crude on London’s ICE futures exchange was trading at $104.31/bbl, down by $1.81/bbl from the previous close.
Earlier, the North Sea benchmark fell to a session low of $104.28/bbl, down by $1.84/bbl.
July NYMEX light sweet crude futures (WTI) were trading at $96.50/bbl, down by $1.74/bbl from the previous close. Earlier, the US benchmark hit a low of $96.46/bbl, down $1.78/bbl.
The US Federal Reserve Chairman Ben Bernanke said that the central bank would continue its $85bn (€64bn) per month monetary stimulus programme.
However, it could start to scale back the measures towards the end of 2013 and may end the programme entirely by mid 2014, if economic conditions proved favourable. Both crude and equity markets fell on the news with the stimulus measures seen as supporting the present recovery.
In its latest quarterly outlook, the Fed said it expects that US economy to grow at a modest pace and that the unemployment rate will decline gradually. The Fed plans to maintain its record low interest rate.
Federal Reserve did lower its 2013 growth forecast for the US economy slightly to 2.3% to 2.6%. However, it edged up its growth forecasts for 2014 at 3.0% to 3.5%.
May government data had revealed that US jobless rate rose slightly to 7.6%. The Fed expects jobless rates to edge down to 7.2% to 7.3% by the end of the year and to fall to around 6.50% in 2014.
Concerns over China’s manufacturing sector were heightened after HSBC’s flash June purchasing managers' index (PMI) for China declined to 48.3 from a level of 49.2 in May. HSBC’s June PMI value for China is the lowest since September 2012. The bank attributed the fall to worsening external demand, slowing domestic demand and destocking pressure in the world’s second largest economy.
PMI is viewed as a key indicator of manufacturing and economic activity. A PMI figure over 50 is viewed as sign of expansion in economic activity, while a figure below 50 is viewed as a sign of a contraction.
($1 = €0.75)
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