Crude Oil Ends Sharply Lower On China Concerns

(RTTNews) - U.S. crude oil dropped sharply to end at a near two-week low Wednesday, on demand growth concerns after some weak factory activity data out of China, the world's second largest oil consumer with the dollar strengthening against some major currencies.

Investors largely ignored a more-than-expected decline in weekly crude oil inventories. The Energy Information Administration's latest data showed U.S. crude oil inventories to have dipped 2.80 million barrels and gasoline stocks shed 1.40 million barrels in the week ended July 19. Analysts expected crude oil inventories to dip 2.10 million barrels and gasoline stocks to add 0.90 million barrels last week.

China's factory activity for July dropped to its lowest level in eleven months amid a continued slide in new orders and faster de-stocking, a survey by Markit Economics and HSBC showed. The purchasing managers' index, an indicator of the country's factory sector performance, dropped to 47.7 in July from 48.2 in June. An index reading below 50 suggests deterioration in activity.

Light Sweet Crude Oil futures for September delivery, the most actively traded contract, declined $1.84 or 1.7 percent to close at $105.39 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for September delivery scaled a high of $107.52 a barrel intraday and a low of $104.79.

Yesterday, oil settled marginally higher ahead of the weekly oil inventories data with the dollar weakening against a basket of major currencies.

Late Tuesday, the American Petroleum Institute said U.S. crude oil inventories shed 1.4 million barrels and gasoline stocks were down 0.89 million barrels in the week ended July 19.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 82.30 on Wednesday, up from 82.03 late Tuesday in North American trade. The dollar scaled a high of 82.41 intraday and a low of 81.94.

The euro traded lower against the dollar at $1.3197 on Wednesday, as compared to $1.3224 late Tuesday in North America. The euro scaled a high of $1.3254 intraday and a low of $1.3178.

In economic news from the U.S., the Commerce Department said new home sales surged 8.3 percent to an annual rate of 497,000 in June from the revised May rate of 459,000. Economists expected new home sales to climb to an annual rate of 481,000 from the 476,000 originally reported for the previous month.

Elsewhere, eurozone private sector activity increased more than expected in July, a preliminary report from Markit Economics showed. The flash composite output index that measures business activity in both manufacturing and services sectors, rose to an 18-month high of 50.4 in July from 48.7 in June. Economists had forecast the index to rise to 49.1.

German private sector business activity rose at the fastest pace in five months in July, preliminary results of a survey by Markit Economics showed. The composite output index that measures performance of both manufacturing and services, rose to a five-month high of 52.8 in July from 50.4 in June. Readings above 50 indicates expansion in activity.