Investing.com - Crude oil prices reversed early gains in Asia on Wednesday as weak China manufacturing estimates trumped U.S. industry data that showed a much larger than expected draw in U.S. stockpiles last week.
The Caixin Manufacturing index for September fell to 47, from the August level of 47.3, putting it at a 78-month low. On Tuesday, the Asian Development Bank lowered its 2015 economic growth projections for China from 7.2% and 6.8%. The U.S. and China are the top two importers of oil in the world, each bringing in more than 7.0 million barrels per day.
Earlier, the American Petroleum Institute said crude stocks fell a whopping 3.7 million barrels last week, compared to an estimate ofa 700,000 barrels drop. Data on refined products was notr immediately available.
Later Wednesday, the U.S. Department of Energy will release its own estimates on crude and refined produc stockpiles. Last week, WTI crude futures soared by nearly 6% in Wednesday's session, after the U.S. Energy Information Administration (EIA) reported a significant draw in crude stockpiles over the previous week. For the week ending on Sept. 11, crude inventories nationwide fell by 2.1 million to 455.9 million barrels, near its highest level at this time of year in at least 80 years. Wednesday's government report could show that U.S. crude inventories fell by another 1.0 million barrels for the week ending Sept. 18.
On the New York Mercantile Exchange, WTI crude for November delivery traded down 0.33% to $46.20 a barrel.
Overnight, U.S. crude futures fell mildly on Tuesday paring some losses late in the session, amid continued fears of softening demand throughout global energy markets.
On the Intercontinental Exchange (ICE), Brent crude for November delivery wavered between $47.70 and $49.17 a barrel, before closing at $49.03, up 0.11 or 0.22% on the day. The spread between the international and U.S. benchmarks of crude stood at $2.73, remaining at near eight-month lows.
Oil prices have dropped considerably since OPEC rattled energy markets last November with a strategic decision to leave its production ceiling unchanged in an attempt to regain market share. The initiative was reportedly aimed at undercutting U.S. shale producers, which face higher drilling costs. As a result, crude prices worldwide have fallen precipitously amid a glut of oversupply on global markets. The EIA expects the supply-demand gap in the U.S. this year to exceed 2.0 million bpd.
The oil crash has reportedly created a large source of tension between Saudi Arabia and a host of smaller OPEC members, whose nations are heavily dependent on oil exports for stabilizing their economies. Last week, OPEC predicted that oil prices could return back to $55 a barrel by the end of the year and $80 by 2020, as production wanes. Venezuela and Iran, meanwhile, would like to see crude move back up near $70 over the final months of the year.