Crude Oil Plunges To End Below $46 On Demand Growth Concerns

(RTTNews) - U.S. crude oil plunged to end sharply lower on Tuesday, surrendering most of the massive gains made yesterday on concerns over demand growth outlook, after some disappointing economic data from China.

Crude oil prices turned lower after a stunning rally over the previous few sessions.

Talk of discord among OPEC nations over cutting output has also been instrumental in crude oil's big drop. Yesterday, it was reported that members of the Organization of the Petroleum Exporting Countries expressed deep concerns over the steep fall in prices.

The Wall Street Journal reported Venezuela as impatient with cheap oil, and wanted to call an emergency meeting hoping to get other OPEC members to cut production.

Demand growth concerns over China continued to weigh on investors, with its purchasing managers index dropping to a three-year low. China's official manufacturing purchasing managers index for August dropped to 49.7, from 50.0 in July, its lowest level since August 2012.

In some disappointing economic news from the U.S., activity in the manufacturing sector grew at an unexpectedly slower rate in August, a report from the Institute for Supply Management said Tuesday. The index of activity in the sector dropped to its lowest level in over two years.

Light Sweet Crude Oil futures for October delivery, the most actively traded contract, plummeted $3.79 or 7.7 percent, to settle at $45.41 a barrel on the New York Mercantile Exchange Tuesday.

Crude prices for October delivery scaled a high of $48.87 a barrel intraday and a low of $45.22.

On Monday, crude oil futures surged $3.98 or 8.8 percent, to settle at $49.20 a barrel, after official data showed domestic output in the U.S. to have declined significantly, even as reports indicate concerns of the Organization of the Petroleum Exporting Countries over the steep fall in prices.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 95.54 on Tuesday, down from its previous close of 95.93 in late North American trade on Monday. The dollar scaled a high of 95.87 intraday and a low of 95.19.

The euro trended higher against the dollar at $1.1275 on Tuesday, as compared to its previous close of $1.1212 in North American trade late Monday. The euro scaled a high of $1.1333 intraday and a low of $1.1209.

On the economic front, the ISM said its U.S. purchasing managers index dropped to 51.1 in August from 52.7 in July, although a reading above 50 indicates continued growth in the manufacturing sector. The decrease came as a surprise to economists, who had expected the manufacturing index to inch up to a reading of 52.8.

Chinese manufacturers reported the sharpest deterioration in operating conditions in more than six years in August, while the service sector expanded at the slowest pace in the current 13-month sequence of growth.

China's manufacturing Purchasing Managers' Index dropped to 47.3 in August, the lowest reading since March 2009, data from Caixin Insight Group and Markit showed Tuesday. The sector has been contracting for six successive months. The reading was above the flash score of 47.1 but was down from 47.8 in July.

Eurozone unemployment rate unexpectedly dropped in July to its lowest level in three-and-a-half years, adding to hopes that consumer spending would support growth amid low inflation. The unemployment rate dropped to 10.9 percent in July, after holding steady at 11.1 percent in the previous two months, data from Eurostat revealed Tuesday. The figure was expected to remain at the 11.1 percent level for a fourth straight month.

Eurozone factory expansion slowed marginally in August, while the pace was estimated to have remained unchanged earlier, final data from Markit Economics showed Tuesday. The purchasing managers' index for the manufacturing sector dropped to 52.3 in August from 52.4 in July. In the preliminary report, released earlier, the PMI score was shown to have held steady at the previous month's level.

Germany's unemployment declined more than expected in August, reports citing data from the Federal Labor Agency said Tuesday. Unemployment in August declined by 7,000 from the July, even as economists had forecast a decrease of 4,000.

Germany's unemployment rate held steady in July, figures from Destatis showed Tuesday. The jobless rate came in at an adjusted 4.7 percent in July, the same as in the previous month. In the corresponding month last year, the rate was 5.0 percent.

Germany's manufacturing sector registered its fastest growth in 16 months in August, final data from Markit showed Tuesday. The Markit/BME final manufacturing PMI rose to 53.3 in August from 51.8 a month ago. The initial score for August was 53.2.

British manufacturing expansion slowed in August, defying expectations for a modest improvement, survey figures from the Chartered Institute of Procurement & Supply and Markit Economics showed Tuesday. The purchasing managers' index fell to 51.5 from 51.9 in July. Economists had expected a score of 52.