Oil prices dipped today as investors turned their attention to upcoming US employment reports, following gains of almost 3 per cent a day earlier after positive manufacturing data lifted spirits across markets.
US crude for October delivery slipped 27 cents to $73.64 a barrel, after a jump of $1.99 yesterday. ICE Brent dipped 34 cents to $76.01.
Manufacturing in top oil consumers the United States and China accelerated in August, reports showed yesterday, raising hopes record petroleum stockpiles would fall and reviving confidence across markets.
The focus over the next two days was set to turn to lagging US employment indicators, including weekly jobless claims on Thursday. The nation's nonfarm payrolls probably fell for a third straight month in August, a Reuters survey showed, ahead of a monthly report due tomorrow.
Yesterday's rally in oil prices was earlier triggered by data showing China's manufacturing industry accelerated in August, expanding for an 18th consecutive month.
Japan's Nikkei average rose 1.6 per cent today, moving further away from a 16-month low touched the previous day, after the US and Chinese manufacturing data eased investor worries about the global economy.
Global stocks posted their biggest percentage gain this summer yesterday, in tandem with a broad-based commodities rally.
But oil market fundamentals were not as constructive. US crude stockpiles rose three times as much as expected in the week to August 27th, adding 3.4 million barrels, as refineries cut usage rates, the Energy Information Administration said yesterday.
Distillate supplies fell 739,000 barrels, going against forecasts for an increase and snapping 13 straight weeks of gains, while gasoline inventories declined 212,000 barrels, roughly in line with analyst forecasts, the EIA data showed.
EIA statistics showed total US petroleum stockpiles rose last week to a new high of 1.143 billion barrels, up from 1.139 billion the previous week, for the highest inventory levels since at least 1990, when the EIA began tallying weekly stocks data.
The large build in US total crude stockpiles could deepen the contangion in crude markets, when front month futures trade at a discount to later months.
The spread between first- and second-month crude oil contracts ended at $1.50, narrowing from $1.60 on Tuesday, which was the widest level since early June. US crude was also trading close to the biggest discount to Brent crude since May.
Tropical Depression Nine in the eastern Atlantic Ocean strengthened into Tropical Storm Gaston late yesterday as it continued on a westerly path that could head for the Caribbean.
Gaston was expected to gain force slowly over the next 48 hours and could become a hurricane by Sunday or Monday. Some early computer models showed it tracking into the Caribbean, but it was too early to say if it would enter the oil-rich Gulf of Mexico.
Hurricane Earl in the western Atlantic was upgraded to a Category Four hurricane again, and was expected to sideswipe the East Coast from the northern Carolinas, making landfall on Canada's Atlantic coast on Saturday.
Reuters