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SINGAPORE: Oil prices eased on Thursday after data showed China’s manufacturing activity shrank for the fifth month in a row, and as investors cautiously awaited a US personal consumption expenditure report later in the day for any clues on the interest rate outlook.
Brent crude futures for October, which expire on Thursday, dipped 9 cents, or 0.1 percent, at $85.77 per barrel by 9:30 a.m. Saudi time. The more active November contract was down 10 cents, or 0.1 percent, at $85.14.
US West Texas Intermediate crude futures for October eased 6 cents, or 0.1 percent, at $81.57.
China’s manufacturing activity again in August, an official factory survey showed on Thursday, fueling concerns around weakness in the world’s second-biggest economy.
The official purchasing managers’ index rose to 49.7 from 49.3 in July, according to the National Bureau of Statistics, but remained below the 50-point level demarcating contraction from expansion.
A tighter US oil supply outlook supported prices in the previous session, but this was pitted against worries about demand, said Yeap Jun Rong, a market strategist at IG.
“Overall, the conflicting factors force prices onto some indecision today, further brought on by some wait-and-see as focus turns to the US core PCE release later tonight,” Yeap said.
Investors are eyeing inflation numbers as measured by the US personal consumption expenditures, which will be released on Thursday. The PCE is the Federal Reserve’s preferred gauge of inflation.
For now, oil prices are headed for a weekly climb, with US government data showing tighter-than-expected crude supplies, while a military coup in Gabon, a member of the Organization of the Petroleum Exporting Countries, also raised fears of crude oil supply disruptions.
Analysts expect Saudi Arabia to roll over a voluntary oil cut of 1 million barrels per day for a third consecutive month into October, adding to the cuts in place by OPEC+.
Meanwhile, the US government revised its gross domestic product growth to 2.1 percent last quarter, from the 2.4 percent pace reported last month, and data released on Wednesday showed private payroll growth slowed significantly in August.
The Federal Reserve can end its interest rate increase cycle if the labor market and economic growth continue to slow at the current gradual pace, the former president of the Boston Fed said on Wednesday.
“Bad news was good, as weaker US economic data lowered expectations of another rate hike,” ANZ Research said in a note. Higher interest rates reduce demand and pressure oil prices down.