Crude Oil eased by almost ½ dollar this morning to trade at 105.71 while Brent oil has continued to decline since the beginning of the week. After breaking $115 last week Brent has tumbled to trade at 113.85 this morning. Investors were watching the escalating violence in Iraq, where militants over the weekend captured a chunk of new territory in the country’s west. U.S. Secretary of State John Kerry met with Iraqi Prime Minister Nuri al-Maliki to discuss combating the Islamist militants gaining power in the western part of Iraq.
But solid U.S. and Chinese economic data released Monday kept also supported oil prices. The seasonally adjusted Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) registered 57.5 in June, up from 56.4 in May, which indicated the strongest upturn in overall business conditions since May 2010, financial data firm Markit reported.
Existing-home sales heated up in May, up 4.9 percent to a seasonally adjusted annual rate of 4.89 million, marking the highest monthly percentage gain since August 2011, according to the National Association of Realtors. The latest housing figure topped market expectations and indicated that sales activity is rebounding after a lackluster first quarter.
In China, preliminary reading of HSBC’s China manufacturing Purchasing Managers’ Index jumped to 50.8 from a final reading of 49.4 in May, hitting a seven-month high.
However, unfavorable economic data from the eurozone capped sharp gains in the commodity. French Flash Manufacturing Purchasing Managers’ Index (PMI) declined by 1.8 points to 47.8-mark in June as against a rise of 49.6-level in May. French Flash Services PMI fell by 0.9 points to 48.2-level in current month from 49.1-mark in May. German Flash Manufacturing PMI rose marginally to 52.4-mark in June with respect to 52.3-level in last month. German Flash Services PMI dropped by 1.2 points to 54.8-mark in present month when compared to 56-level in May. Euro Zone Flash Manufacturing PMI plunged by 0.3 points to 51.9-level in existing month as compared to 52.2-mark in May. Euro Zone Flash Services PMI decreased by 0.4 points to 52.8-mark in June from 53.2-level in May.
Oil prices have rallied nearly five percent amid crisis in Iraq this month, however prices declined on Monday, its largest decline in five weeks as oil exports from Iraq remain unaffected by Islamic insurgents’ who have continued to advance on Baghdad. Iraq ships 90 percent of its crude exports from southern terminals, which are far from the Sunni insurgency. The country’s oil exports in June were near record rates at around 2.53 million barrels per day. The conflict in Iraq has added about a $3 per barrel risk premium into the Brent and U.S. crude oil market.