Tags: oil | crude | nymex | manufacturing

Oil Prices Sink on Manufacturing Weakness, Euro Worries

Tuesday, 04 September 2012 04:15 PM

Oil prices fell Tuesday as U.S. and euro-area manufacturing contracted in August and on signs that the European economic crisis is deepening.

Prices dropped for the third time in four sessions after the Institute for Supply Management’s U.S. factory index fell more than analysts forecast. In the euro area, manufacturing contracted more than initially estimated in August. Moody’s Investors Service lowered the outlook on the European Union’s Aaa long-term bond rating to negative from stable Monday.

“We are seeing downward prices because of the poor economy,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “The ISM number compounds the earlier manufacturing number from Europe, and, overall, the economic data is weak.”

Oil for October delivery slipped 86 cents, or 0.9 percent, to $95.61 a barrel at 10:12 a.m. on the New York Mercantile Exchange after rising to $97.37. There was no floor trading Monday because of the U.S. Labor Day holiday, and transactions since Friday's close will be booked with Tuesday’s trades for settlement.

Brent oil for October settlement fell $1.01, or 0.9 percent, to $114.77 a barrel on the London-based ICE Futures Europe exchange.

The U.S. manufacturing index fell to 49.6 in August from 49.8 a month earlier, the Tempe, Arizona-based ISM said Tuesday. Economists in a Bloomberg survey projected an August reading of 50, which is the dividing line between expansion and contraction.

European Manufacturing

A gauge of manufacturing in the 17-nation euro area based on a survey of purchasing managers was revised lower to 45.1 from the reading of 45.3 estimated earlier, London-based Markit Economics said Tuesday. It stood at 44 in July and has held for 13 months below 50, indicating contraction.

“There is still a good chance that we’ll see Europe falling back to recession and that’s kind of weighing on the market,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut.

Moody’s lowered the outlook to reflect the risks to Germany, France, the U.K. and the Netherlands that account for about 45 percent of the group’s budget revenue, according to a company statement.

About 58 percent of U.S. Gulf of Mexico oil production remained shut in after Hurricane Isaac made landfall last week, or 804,000 barrels a day, a U.S. Bureau of Safety and Environmental Enforcement report showed yesterday.

“It seems like the recovery in the Gulf is a bit slow,” McGillian said.

© Copyright 2018 Bloomberg News. All rights reserved.

1Like our page
Tuesday, 04 September 2012 04:15 PM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved