Oil prices rebound

Oil prices rebounded Tuesday after falling steeply in the previous session due to weak Chinese and US manufacturing and continued worries about the global supply glut, analysts said.

US benchmark West Texas Intermediate (WTI) for September delivery rose 88 cents to $46.05 a barrel compared with Monday's close in trading at 1615 GMT on the New York Mercantile Exchange (Nymex).

Brent North Sea crude for September climbed 54 cents to $50.06 a barrel in trading on the Intercontinental Exchange (ICE) in London.

WTI had plummeted $1.95 while Brent tumbled $2.69 on Monday, dropping below $50 per barrel for the first time in six months, extending sharp losses of more than two percent on Friday.

Analysts said the small rebound was likely to be capped as dealers focused on sluggish manufacturing data from energy guzzlers China and the United States.

"Weak Chinese data and a continued high rate of OPEC production ... are weighing on prices, as is a nine-percent slump in US gasoline prices," said analysts at Commerzbank.

A key private economic indicator on the Chinese manufacturing sector, Caixin's purchasing managers index, showed a plunge in July to a two-year low of 47.8, deeper into contraction territory.

A reading of 50 marks the line between growth and contraction. The official PMI showed a drop to 50.0 in July from 50.2 in June.

In the United States, the Institute for Supply Management's purchasing managers index showed manufacturing activity cooled to 52.7 in July from 53.5 in June.

"Weakening growth in the global economy piled on the pressure for commodities," said Bernard Aw, market strategist at IG Markets in Singapore.

"Juxtaposing the waning demand in crude oil with persistent upticks in supply, the overhang seems to be widening," he added.

Long-running worries about the global supply glut were exacerbated by comments from the Iranian oil minister, Bijan Zanganeh, on the Islamic Republic's plans to ramp up oil exports once sanctions are lifted, as part of the country's deal with six powers to restrain its nuclear programme.

The price of crude has steadily fallen from around $120 a barrel in June last year, largely due to oversupply caused by the OPEC oil cartel's refusal to trim lofty output levels and surging US shale production.

"Short-term oil market balances remain weak amidst record high OPEC output and limited drop in US production," said analysts at Energy Aspects, who noted that crude supplies tend to react with a lag to prices.

"With supply yet to react substantially, crude is being driven by demand," they added.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.7137-0.0031-0.43%
    AUDUSD=X
    0.4639-0.0013-0.29%
    AUDGBP=X
    0.6334-0.004-0.62%
    AUDEUR=X