Crude drops on soft Chinese output data, weaker dollar supports


Shutterstock photo - Oil prices slumped in U.S. trading on Thursday after a widely-followed Chinese output barometer missed expectations and stoked fears the global economy still faces headwinds and will demand less energy and fuels than anticipated.

A weaker dollar curbed oil's losses.

On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded down 0.78% at USD93.54 a barrel on Thursday, off from a session high of USD94.19 and up from an earlier session low of USD92.24.

A preliminary reading of China's HSBC manufacturing purchasing managers' index fell to 49.6 in May from a final reading of 50.4 in April, missing market expectations for a 50.5 reading.

China is the world's second-largest consumer of oil, and the disappointing output numbers sent crude prices falling on sentiment that global demand for goods produced in the Asian giant's all-important manufacturing sector may be weaker than once thought.

A weaker dollar, however, supported oil prices.

Earlier Thursday, Federal Reserve Bank of St. Louis James Bullard said that the U.S. central bank wasn't "that close" to scaling back stimulus measures.

Stimulus tools such as the Fed's monthly USD85 billion bond-buying program weaken the dollar to spur recovery, and talk of their staying in place these days can soften the greenback quickly.

A weaker greenback makes oil an attractively priced commodity in dollar-denominated exchanges, especially in the eyes of investors holding other currencies.

Elsewhere on the ICE Futures Exchange, Brent oil futures for July delivery were down 0.66% at USD101.93 a barrel, up USD8.39 from its U.S. counterpart. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.
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This article appears in: Investing Forex and Currencies
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