NYMEX crude stays weaker in Asia after unexpected China HSBC PMI drop

Investing.com - Crude oil prices stayed weaker in Asia on Monday after the China HSBC Flash Purchasing Managers Index for March unexpectedly fell, placing demand doubts in the market about the world's second largest crude oil importer.

The HSBC data for March showed a drop to 48.1, compared to a forecast of 48.7 expected and to a final of 48.5 for the previous month. A figure below 50 implies contraction with the the latest number part of a string of disappointing China data suggesting a deepening economic slowdown at the start of 2014.

"The HSBC Flash China Manufacturing PMI reading for March suggests that China's growth momentum continued to slow down. Weakness is broadly based with domestic demand softening further," said HSBC chief China economist Qu Hongbin.

"We expect Beijing to launch a series of policy measures to stabilize growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air cleaning and public housing, and guiding lending rates lower."

On the New York Mercantile Exchange, crude oil futures for delivery in May traded at $99.20 a barrel, down 0.26%. Crude oil settled 0.57% higher, or 56 cents, at $99.46 a barrel, last week on speculation over the fallout from the Ukraine crisis and amid indications the U.S. economy is improving.

Investors continued to monitor events in the Ukraine, where tension over moves by neighboring Russia in the Crimean region have underpinned prices.

The political standoff between the West and Russia following the annexation of Crimea escalated after the U.S. imposed harsher sanctions on Moscow. The European Union also agreed to wider sanctions against Russia.

Meanwhile, the Federal Reserve reduced its monthly bond purchases by an additional $10 billion to $55 billion at the conclusion of its two-day policy meeting on Wednesday, citing “underlying strength in the broader economy.”

Fed Chairwoman Janet Yellen indicated that the central bank could begin to raise interest rates about six months after its bond-buying program winds up, which is expected to happen this fall.

The comments prompted investors to bring forward expectations for a rate hike to as soon as March of next year.

In the coming week, investors will be looking ahead to U.S. data from the housing sector, as well as reports on consumer confidence and durable goods to further gauge the strength of the economy.

Data from the Commodities Futures Trading Commission released Friday showed that hedge funds and money managers reduced their bullish bets in New York-traded oil futures in the week ending March 18.

Net longs totaled 302,320 contracts, down 7.85% from net longs of 328,095 in the preceding week.

Elsewhere, on the ICE Futures Exchange in London, Brent oil Brent Oil for May delivery added 0.44%, or 47 cents, on Friday to settle the week at $106.92 a barrel.

Despite Friday’s gains, the May Brent contract declined 1.19%, or $1.29, on the week. Meanwhile, the spread between the Brent and the WTI crude contracts stood at $7.46 a barrel by close of trade on Friday.

On Monday, the U.S. is to release preliminary data on manufacturing activity.