Oil stays below $104 despite China factory growthAugust 22, 2013
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PAMELA SAMPSON, AP Business Writer
BANGKOK (AP) — A rebound in China's manufacturing couldn't boost the price of oil Thursday as traders braced for the Federal Reserve to start phasing out its monetary stimulus.
Benchmark oil for October delivery was down 5 cents to $103.80 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped $1.26 to close at $103.85 a barrel on the New York Mercantile Exchange.
HSBC Corp. said the preliminary version of its monthly China purchasing managers' index rose to 50.1 for August, a sharp improvement from July's 47.7 reading. Numbers above 50 indicate an expansion in activity.
The improvement in China's factory output was overshadowed by expectations that the Federal Reserve will begin to reduce its monetary stimulus because the U.S. economy is showing signs of improvement.
The program was intended to push down interest rates and spark investment, but also weighed on the dollar's value. However, the dollar has crept up in recent days amid expectations that the Fed will gradually reduce its purchases of Treasurys and other bonds.
Michael Hewson of CMC Markets said oil prices "have stayed under pressure" as the dollar firms.
When the dollar rises, oil gets more expensive for foreign currency holders and thus losses some of its investment appeal.
Falling U.S. crude inventories, which suggest stronger demand for oil, also failed to boost prices. For the week ended Aug. 16, stockpiles of crude feel by nearly 1.2 million barrels to 364.1 million barrels, according to the American Petroleum Institute.
Brent crude, which is used to set prices for imported oil used by many U.S. refineries, fell 21 cents to $109.60 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Heating oil fell 0.5 cent to $3.077 per gallon.
— Natural gas rose 0.7 cent to $3.467 per 1,000 cubic feet.
— Wholesale gasoline was little changed at $2.819 per gallon.