Brent Slips on Chinese PMI

 
on July 24 2013 8:14 AM
Crude Oil
Reuters

Brent crude oil was under pressure on Wednesday after Chinese PMI data revealed that the number two oil consuming nation's economy could be slipping.

The commodity remained above $108, though, on falling US crude stocks and tension in the Middle East. Brent traded at $108.16 at 7:00 GMT on Wednesday morning.

CNBC reported that China's economy lost momentum in July after a lack of new orders slowed the nation's enormous manufacturing sector to an 11 month low in July. China has been under a microscope recently as the nation's economic indicators reveal a struggle to get back on track. The PMI data was a blow to Brent prices, as investors lost some of their hope for a revival in global demand.

However, many are expecting oil to recoup some of its losses later in the day if the US government releases data that validates speculation that US stocks have been depleted. On Tuesday the American Petroleum Institute released data which indicated that oil stockpiles in the US had dropped. The figures came as a surprise, since initial forecasts showed the stocks had increased by upwards of a million barrels.

Now, investors will wait for the Energy Information Administration to release inventory data later on Wednesday to confirm the news.

Geopolitical tension has also been keeping Brent well supported as ongoing conflict in the Middle East and Africa has kept investors wondering if a supply interruption is possible in the future. In Cairo, a bomb killed one and wounded 17 in the early hours of Wednesday.

Instability in Egypt following the removal of President Mohammed Morsi has played a large role in Brent prices, since many are concerned that the ongoing violence could eventually create problems at the Suez Canal, where much of the world's oil is shipped.

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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