Oil Falls After US Manufacturing Unexpectedly Shrinks In June

Oil fell after manufacturing in the U.S. unexpectedly shrank in June for the first time in almost three years. Prices dropped 1.4 percent as the Institute for Supply Management’s U.S. factory index fell to 49.7 in June from 53.5 a month earlier. Moreover, euro-area unemployment reached the highest level on record in May, the European Union’s statistics office said.

Oil’s decline followed a 9.4 percent jump June 29. Crude for August delivery decreased $1.21 to settle at $83.75 a barrel on the New York Mercantile Exchange. Prices climbed $7.27 on June 29 to $84.96. The percentage gain was the biggest since March 12, 2009. Oil is down 15 percent this year. Prices also declined as Chinese manufacturing indexes slipped to seven-month lows as overseas orders dropped. The HSBC Manufacturing Purchasing Managers’ Index for China fell to 48.2 last month from 48.4 in May, according to the final reading of the gauge released by HSBC Holdings Plc and Markit Economics. From U.S. to Asia clearly the oil demand is at stake.

Gold
The yellow metal eased after a sharp rally last week along with euro and other commodities as optimism fades. It surged 3 percent after eurozone leaders’ consensus at a two-day summit on measures that sliced Spanish and Italians borrowing cost. It fell a bit yet optimism somehow lingers somewhere around the corner. Spot gold was down 0.3 percent at $1592 early Monday while U.S. gold futures for August contract were down $11 an ounce at $1593.

Demand for gold from the world’s number one consumer, India declined as prices rose with depreciation in the rupee raising prices for local buyers. Money managers cut their net long position in gold futures and options by 20 percent as lack of fresh monetary stimulus from the US Federal Reserve which extended Operation Twist instead.