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NYMEX crude jumps in Asia as mixed manufacturing data supports

Published 09/30/2015, 11:24 PM
Updated 09/30/2015, 11:26 PM
© Reuters.  NYMEX crude jumps in Asia

© Reuters. NYMEX crude jumps in Asia

Investing.com - Crude oil prices rebounded in Asia on Thursday after a slew of data on manufacturing painted a mixed, but hopeful, regional picture.

On the New York Mercantile Exchange, WTI crude for November delivery rose 1.31% to $45.68 a barrel.

Today, China starts a week-long holiday to mark the country's National Day, but surveys on manufacturing and services were released.

The official CFLP manufacturing PMI improved slightly to 49.8 in September, and beat an expectation of 49.6, as it inched toward expansion territory above 50 thanks to strong gains in new orders and production.

The Caixin manufacturing PMI for September came in as expected at 47.2 and above the flash manufacturing PMI reading of 47.0, the lowest since March 2009.

The Caixin Services index came in at 50.5, compared to 51.5 in August.

The Bank of Japan's quarterly Tankan survey showed the large manufacturing index in the latest quarter at +12, from +15 in June and a +13 expected.

The figures show that a further Chinese slowdown and unstable stock markets are making many manufacturers more cautious.

Backed by record profits, companies have high capital investment plans but they are putting some of them on hold until prospects improve, likely leading the BoJ to maintain the pace of its asset purchases at its two-day policy meeting on Oct. 6-7 in the absence of a major external shock that could threaten the path to stable 2% inflation.

But at its Oct. 30 meeting, the BoJ board is likely to lower its median GDP and CPI forecasts for fiscal 2015 as exports, spending and capex remain weak.

In Australia, the AI Group manufacturing index rose 0.4 point to 52.1, the third straight monthly gain.

Federal Reserve chair Janet Yellen on Wednesday afternoon steered clear of new comments on rates.

Yellen on Wednesday pointed to the "significant improvement" the economy has made in recent years as she spoke Wednesday about the challenges facing the nation's community banks.

Yellen avoided further comments on the economy or on monetary policy less than a week after she said the Fed had moved far enough toward achieving its employment and inflation goals that an initial hike in the federal funds rate is likely "sometime later this year."

Overnight, U.S. crude futures inched down on Wednesday paring earlier gains, after crude inventories rose considerably last week adding to the glut of oversupply in domestic energy markets.

On the Intercontinental Exchange (ICE), Brent crude for November delivery traded between $47.80 and $48.97 a barrel before settling at $48.36, up 0.12 or 0.18% on the day. After opening the month near $50 a barrel, brent futures fell mildly by roughly 1.5% in September. Meanwhile, the spread between the international and U.S. domestic benchmarks of crude stood at $3.23, above Tuesday's level of $3.00 at the close of trading.

In its Weekly Petroleum Status Report on Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude stockpiles rose by 4.0 million barrels for the week ending on Sept. 25, significantly above estimates for a 0.5 million draw. It halts a two week streak of draws of at least 1.9 million barrels. At 457.9 million barrels, U.S. crude inventories remain near its highest level at this time of the year in at least 80 years.

In addition, motor gas inventories increased by 3.3 million barrels and are near the upper limit of the average range, according to the EIA, while distillate fuel inventories decreased by 0.3 million barrels on the week. Refineries operated at 89.8% of their capacity last week, as they continue to scale back production following the completion of the summer driving season. Demand indications for gasoline, however, are still high as they remained about 4% higher last week on a year-over-year basis.

U.S. production, meanwhile, fell sharply by 40,000 barrels per day last week, dropping below 9.1 million bpd for the first time since last November. Crashing oil prices have forced U.S. shale producers to slow output dramatically from its levels over the summer when it surged to 40-year highs.

Energy traders also reacted to the start of an air campaign by Russia against the Islamic State in Syria, as well as potential disruptions in the Bahamas from Tropical Storm Joaquin. The targeted air strikes against ISIS, however, might prove to have a muted effect on oil prices. In May, crude production in Syria slumped below 25,000 bpd, a fraction of the 400,000 bpd the Gulf state producer prior to a civil conflict that began in the spring of 2011. A plethora of sanctions by Western powers has limited Syria's exploration and production capabilities, while the nation's largest oil fields, including ones in the Deir-Ez-Zour region have fallen to ISIS, according to the EIA.

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