The price of crude oil dipped to a fresh 7-month low Friday morning amid a generally steady U.S. dollar and on weak manufacturing data from China, the second largest oil consuming nation.
Overnight data from China revealed the official China purchasing managers index fell to 50.4 from 53.3 in April and lower than economists' expectations for a reading of 51.5.
Light Sweet Crude Oil (WTI) futures for July lost $1.65 to $84.88 a barrel. Yesterday, oil extended its seven-month low to settle below $87 on continued worries over global demand growth with some soft economic data led by disappointing GDP data from the U.S. and India. Oil prices were also impacted by a more-than-anticipated increase in U.S. crude stockpiles for the previous week and continued worries over euro zone debt problems.
Thursday during trading hours, the EIA said U.S. crude oil inventories increased by 2.20 million barrels, while gasoline stocks moved down by 800,000 barrels in the weekended May 25. Analysts were expecting crude oil inventories to gain 100,000 barrels, while gasoline stocks are seen unchanged last week.
This morning, the U.S. dollar was extending its two-year high versus the euro and trading around its five-month high against sterling. The buck was steady near a 16-month high against the Swiss franc, while lingering near a 4-month low versus the yen.
In economic news, euro zone manufacturing activity deteriorated at the strongest pace in nearly three years in May, detailed results of a survey conducted by Markit Economics showed. The seasonally adjusted purchasing managers' index, a performance indicator for the manufacturing sector, fell to 45.1 in May from 45.9 in April. This was marginally above the flash estimate of 45. The PMI has signaled contraction in each of the past ten months.
A report from the Eurostat revealed that the euro zone jobless rate came in at 11 percent in April, the same rate as seen in March and matching economists' expectations. About 17.4 million were unemployed in the euro area. Compared with March, the number of persons unemployed increased by 110,000 in April.
Traders will look to the non-farm payroll report from the U.S. Labor Department due out at 8.30 a.m. ET. Economists expect non-farm payrolls for May to increase by 150,000 and the unemployment rate to remain unchanged at 8.1 percent. In April, the economy added a smaller than expected 115,000 jobs, while the unemployment rate ticked down to 8.1 percent.
Simultaneously, the Commerce Department is due to release its personal income & outlays report for April. Economists expect the report to show that personal income as well as personal spending rose 0.3 percent in April.
Later during the session, the results of the manufacturing survey of the Institute for Supply Management, which are based on data compiled from purchasing and supply executives nationwide, are due out. Economists expect the index to show a reading of 54 for May, a modest drop from 54.8 in April.
by RTT Staff Writer
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