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Crude oil futures plunge 2% to hit 6-week low after weak U.S. data

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Investing.com - Crude oil futures came under heavy selling pressure during U.S. morning hours on Thursday, falling to six-week low following the release of mostly negative U.S. economic data.

Prices were already on the back foot amid concern the Federal Reserve may scale back its stimulus program and market talk that a large hedge fund was liquidating positions in the commodity market.

On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD92.94 a barrel during U.S. morning trade, down 2.4% on the day.

New York-traded oil prices fell by as much as 2.6% earlier in the session to hit a daily low of USD92.67 a barrel, the weakest level since January 11.

Oil prices held on to losses after a report showed that manufacturing activity in the Philadelphia-region contracted at the fastest rate since July in February.

The Federal Reserve Bank of Philadelphia said that its manufacturing index fell to minus 12.5 in February from January's reading of minus 5.8.

Analysts had expected the index to improve to a reading of 1.0 in February.

The report came after data showing that the number of people filing for initial jobless claims rose-more-than-expected last week.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending February 16 rose by 20,000 to a seasonally adjusted 362,000, compared to expectations for an increase of 13,000 to 355,000.

Meanwhile, fresh concerns over the deteriorating economic situation in the euro zone also weighed on growth-linked assets.

Market research group Markit said that its preliminary euro zone manufacturing purchasing managers' index fell to a seasonally adjusted 47.8 in February from a final reading of 47.9 in January.

Analysts had expected the index to ease up to 48.4 in February.

Meanwhile, Germany's manufacturing purchasing managers' index rose to a seasonally adjusted 50.1 in February from a final reading of 49.8 in January, moving into expansion territory for the first time in 12 months but slightly below expectations for an increase to 50.5.

The report also showed that service sector activity in Germany expanded at the slowest rate in two months in February, with the services PMI declining to 54.1 from 55.7 in January. Analysts had expected the index to ease down to 55.5.

The data came after a report showing that the French manufacturing PMI rose to 43.6 in February from a final reading of 42.9 in January, compared to expectations for a reading of 43.8.

Service sector activity in France fell to a 48-month low of 42.7 in February from a final reading of 43.6 in January. Analysts had expected the index to ease up to 44.5.

Oil traders now looked ahead to data from the U.S. government on oil and fuel supplies later in the day to gauge the strength of demand from the world's largest oil consumer.

The report, which comes out a day later than usual due to the President's Day holiday in the U.S. earlier in the week, was expected to show that U.S. crude oil stockpiles increased by 1.8 million barrels last week, while gasoline inventories were forecast to fall by 0.7 million barrels.

After markets closed Wednesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 2.96 million barrels last week, while gasoline stocks declined 0.12 million barrels.

The U.S. is the world's biggest oil-consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery fell 1.7% to trade at USD113.67 a barrel, with spread between the Brent and crude contracts standing at USD20.73 a barrel.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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