Oil complex settles higher on eurozone PMI, weak US dollar
New York (Platts)--3Jun2013/405 pm EDT/2005 GMT
NYMEX July crude settled $1.48 higher at $93.45/barrel Monday, largely
holding to overnight gains following better-than-expected eurozone
manufacturing data.
Weak US manufacturing data put downward pressure on the US dollar, which
provided added support to crude and product futures.
ICE July Brent crude settled $1.67 up at $102.06/b, and found support in
a production shut-in of Nexen's 220,000 b/d North Sea Buzzard oil field
over the weekend.
Several North Sea crude oil traders said the outage had only a minor
impact on the market, partly due to what had been a lack of information
on the expected duration. But, production is expected to return by the
middle of the week, Nexen said Monday.
The strength in Brent in turn boosted US products. NYMEX July ULSD
settled 5.20 cents higher at $2.8334/gal. July RBOB settled up 3.02
cents at $2.7851/gal.
"The weak ISM data put the dollar under a lot of pressure," Tradition
Energy analyst Gene McGillian said. "And this put a bid in the market
for crude."
"We can't seem to drop below the $92/b level before we start to turn
higher," he added. "The shorts pile up, and we lose momentum as we get
near $94."
ISM manufacturing data US activity moved into contraction in May,
largely on slower government spending, AFP reported. The ISM purchasing
managers index dropped to 49 from 50.7 in April. The 50 level represents
the division between contraction and expansion in manufacturing
activity.
While bearish in nature, the weak reading sent the US Dollar Index
tumbling, from 83.38 at the start of the session to a low of 82.43
during late-afternoon US trading. The index was 82.56 around the time of
the NYMEX settle.
The Chinese manufacturing purchasing managers' index was largely bearish
as well. The HSBC "flash" PMI came in at 49.20, slightly below
economists expectations.
But crude and products largely held strong to overnight gains following
strong eurozone manufacturing figures released ahead of the US trading
day.
"Stronger than expected Euro Zone PMI data represented both the hope of
increased fuel demand and a boost for the euro, both supportive factors
for oil priced in US dollars," Citi Futures Perspectives energy analyst
Tim Evans said in a note.
"It could be nothing more than a really oversold market," Oil Outlooks
President Carl Larry said. "I think the big picture involves people
expecting to see the first big draw [in US commercial crude stocks] of
the season."
Strength in NYMEX products was likely equal parts following Brent higher
due to the Buzzard outage and a weaker-than-normal Friday that saw
product futures drop, according to Phyllis Nystrom, energy analyst at
CHS Hedging.
"With the ISM and the eurozone PMI, it's really a matter of which one
are you going to follow," Nystrom said.
--James Bambino,
james.bambino@platts.com
--Edited by Katharine Fraser,
katharine.fraser@platts.com
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