Oil Futures Settle Lower As Weak Economic Data Triggers Demand Concerns

Despite data showing a drop in U.S. crude inventories in the week ended August 18th, crude oil futures settled lower on Wednesday amid concerns about the outlook for oil demand after data showed a contraction in global manufacturing activity.

West Texas Intermediate Crude oil futures for October ended lower by $0.75 or about 0.9% at $78.89 a barrel.

Brent crude futures dropped $0.82 or nearly 1% at $83.21 a barrel.

Data from U.S. Energy Information Administration (EIA) showed crude inventories in the U.S. fell by 6.1 million barrels last week, more than twice the expected drop of 2.8 million barrels.

Gasoline stockpiles climbed 1.5 million barrels last week, as against forecast for a 888,000 barrel drop.

“The oil market is going to remain tight over the short-term and unless we see a prolonged slowdown in demand, crude prices will likely find a home above the $80 level,” says Edward Moya, Senior Market Analyst at OANDA.

“If dollar weakness emerges from Jackson Hole, that could be the catalyst to send oil back to last month’s highs,” Moya adds.

S&P Global released data showing a slowdown in the pace of growth in U.S. service sector activity in the month of August as well as a contraction in manufacturing activity during the month.

Eurozone business activity contracted further in August as the region’s downturn spread further from manufacturing to services, according to PMI survey data published earlier today.

The S&P Global composite index flash reading fell to 47.0 from 48.6 in July, hitting its lowest since November 2020.

The U.K. manufacturing PMI fell from 45.3 to 41.5 in August, hitting a 39-month low, while the services PMI fell from 51.5 to 48.7, touching a 7-month low.

Source: Read Full Article