Crude oil futures trim losses after Philly Fed data

Crude oil futures trimmed losses during U.S. morning hours on Thursday, coming off the lows after official data showed that manufacturing activity in the Philadelphia-region improved more-than-expected in September. Prices fell to a six-week low earlier in the session, amid mounting fears over the outlook for global economic growth, following a string of weak economic reports from the euro zone and China. On the New York Mercantile Exchange, light sweet crude futures for delivery in November traded at USD92.19 a barrel during U.S. morning trade, easing down 0.1%. Earlier in the session prices fell by as much as 1.45% to hit a daily low of USD90.97 a barrel, the weakest level since August 6. In a report, the Federal Reserve Bank of Philadelphia said that its manufacturing index improved by 5.2 points to minus 1.9 in September from August’s reading of minus 7.1. Analysts had expected the index to improve by 3.1 points to a reading of minus 4.0 in September. The data came after The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending September 15 fell by 3,000 to a seasonally adjusted 382,000, compared to expectations for a decrease of 10,000 to 375,000. The previous week’s figure was revised up to 385,000 from a previously reported 382,000. Some bargain buying also helped futures off the lows, after prices moved into oversold territory. Technical traders said prices had fallen too far, too fast and were due for a technical bounce. New York-traded oil prices have lost more than 8% in the three sessions leading up to Thursday. Oil prices have been under heavy selling pressure in recent sessions amid signs that top oil exporter Saudi Arabia was pumping more oil. The country’s output is near the highest level in more than three decades, according to a Persian Gulf official with knowledge. Prices fell to a six-week low earlier as fresh concerns over the outlook for growth in China were fueled by data showing that the HSBC flash purchasing managers' index ticked up to 47.8 in September from a nine-month low in August of 47.6, but remained below 50 for an 11th consecutive month in a row, showing the sector was still contracting. China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand. A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the euro zone’s ongoing debt crisis. Separately, concerns over the worsening of the debt crisis in the euro zone resurfaced after preliminary data showed that manufacturing activity in France tumbled unexpectedly in September, dropping to a three-and-a-half year low. France’s manufacturing PMI fell to 42.6 in September from a final reading of 46.0 in September. Analysts had expected the index to come in at 46.4. Service sector activity in France declined to a four-month low of 46.1 in September from a final reading of 49.2 in August. Futures managed to come off the lowest levels of the session after data showed manufacturing activity in Germany in September contracted at the slowest rate in six months, while service sector activity grew modestly. Germany’s manufacturing PMI rose to 47.3 in September from a final reading of 44.7 in September. Analysts had expected the index to come in at 45.3. Service sector activity in Germany increased to a four-month high of 50.6 in September from a final reading of 48.3 in August. Oil traders often use manufacturing numbers as indicators for future fuel demand growth. Also Thursday, Also Thursday, Spain saw borrowing costs fall at an auction of ten-year government bonds on Thursday, amid ongoing uncertainty over whether Spain is about to ask for more financial aid, which would mean signing up to a permanent bailout fund. Spain’s Treasury sold EUR859 billion worth of 10-year government bonds at an average yield of 5.66%, down from 6.64% at a similar auction last month. Elsewhere, on the ICE Futures Exchange, Brent oil futures for November delivery added 0.5% to trade at USD108.75 a barrel, with the spread between the Brent and crude contracts standing at USD16.56 a barrel. Prices fell to as low as USD107.19 a barrel earlier in the session, the weakest level since August 3.

Courtesy: ForexPros