U.S. crude oil futures ended lower Monday, with investors weighing demand growth prospects on some soft economic data globally while seeking a safe haven in the dollar. Oil prices were under pressure following some weak manufacturing activity data from the U.S., and as well some soft numbers out of Europe and China. The dollar made gains against most major currencies, while the euro declined.
Activity in the U.S. manufacturing sector unexpectedly contracted in the month of June, a report by the Institute for Supply Management showed. The ISM purchasing managers index dropped to 49.7 in June from 53.5 in May, with a reading below 50 indicating a contraction in manufacturing activity. Economists expected the index to show a modest decrease of 52.0. The index contracted for the first time since July 2009, when it read 49.2.
Light Sweet Crude Oil futures for August delivery, dropped $1.21 or 1.4 percent to close at $83.75 a barrel on the New York Mercantile Exchange Monday.
Crude prices scaled a high of $85.05 a barrel intraday and a low of $82.10.
Oil prices surged nearly 10 percent last week on the deal at the European leaders summit meeting in which the EU agreed to take urgent action to stabilize the Spanish and Italian bond markets, and the ailing eurozone banking sector.
The euro was hit after some shine from the EU deal last week wore off and Finland said it would oppose any move to utilize the eurozone permanent rescue fund to buy distressed sovereign debt.
The euro traded lower against the dollar at $1.2583 on Monday, as compared to $1.2658 late Friday in North America. The euro scaled a high of $1.2680 intraday and a low of 1.2570.
The dollar index, which tracks the U.S. unit against six major currencies, was trading at 81.888 on Monday, up from 81.658 in North American trade late Friday. The dollar scaled a high of 81.96 intraday and a low of 81.53.
Some soft Chinese and European data indicative of thinning global oil demand growth also helped push down prices.
Eurozone unemployment rate hit a new record high in May as companies struggled to contain costs in the midst of stringent competition and weak demand. The jobless rate rose to a record 11.1 percent from 11 percent in April, Eurostat said Monday. Nonetheless, the rate was in line with expectations.
Home prices in the UK stagnated in June as global economic gloom curtailed demand, a survey by Hometrack said Monday. While prices remained unchanged compared to the previous month, the number of first time home buyers fell 0.5 percent, marking the first drop in five months. Property supply, however, increased 1.5 percent on month.
HSBC's China purchasing-managers index for June indicated a reading of 48.2, down from 48.4 in May. Although in excess of the preliminary estimate of 48.1, the reading was at the lowest since March 2009.
China's factory sector expanded at the weakest pace in seven months in June as flagging global economic growth crippled demand for its manufactured goods both at home and abroad. The China Federation of Logistics and Purchasing (CFLP) and the National Bureau of Statistics said its purchasing managers' index for the manufacturing sector fell to 50.2 in June from 50.4 in May.
U.S construction spending increased more than expected in May even as revised figures showed stronger than initially reported construction spending growth in April, according to the Commerce Department. The initial estimate for construction spending in May came in at a seasonally adjusted annual rate of $830 billion, a 0.9 percent increase from revised April estimates. Most economists expected a far more modest increase of 0.2 percent.
by RTT Staff Writer
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