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CRUDE OIL FALLS BELOW $59 MARK

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CRUDE OIL FALLS BELOW $59 MARK

May 5 2015, 08.15am GMT

STOCK.com

Oil futures were down on Monday as demand for crude oil was dampened by a monthly decline in manufacturing activity from China, causing the price to fall back below the $59 a barrel mark.

June crude (CLM5), on the New York Mercantile Exchange, was down 22 cents, or 0.4 percent to trade at $58.93 a barrel. Meanwhile, on London’s Futures exchange, Brent crude for June delivery (LCOM5) decreased to $66.45 a barrel.

Falling to the lowest level since April last year was the HSBC purchasing manager’s index (PMI) from China which is a widely tracked measurement of manufacturing activity. A WTRG Economics energy economist, James Williams said that this is a negative sign for China and that any economic news that is negative from China is bearish for oil.

The weaker results from one of the largest importers of crude oil in the world disrupted the oil futures recent rally, which increased NYMEX oil prices in April by 25 percent.

Separately, data showed on Monday that the manufacturing sector in the eurozone expanded in April however, at a lesser pace than March. Added to this, a report from the Commerce Department in the U.S. revealed an increase of 2.1 percent in March factory orders. This is the biggest factory orders increase in the US since August 2014, says Secular Investor head of research, Taki Tsaklanos.

With the positive economic data out of the U.S., traders seem to be in fear that the Federal Reserve may raise interest rates as early as their next meeting in June which would create a selling trend in the markets, including crude oil and other commodities.

Based on a report that was released on Friday regarding the shift in leadership in Saudi Arabia and the increase in oil exports from Iraq, NYMEX oil prices dropped. Prices for NYMEX petroleum products also closed lower on Monday. June gasoline dropped 1.1 cents, or 0.6 percent to $2.034 a gallon while June heating oil was $1.979 a gallon, declining less than half a cent. June natural gas closed $2.821 per million and British thermal units were up 4.5 cents or 1.6 percent.

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