Oil rises above $104 as China factories ramp up
Michael Hewson of CMC Markets said oil prices "have stayed under pressure" as the dollar firms.
BANGKOK (AP) A rebound in China s manufacturing helped boost the price of oil Thursday as traders braced for the Federal Reserve to start phasing out its monetary stimulus.
Benchmark oil for October delivery reversed early losses and was up 65 cents to $104.51 per barrel by late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped $1.26 to close Wednesday at $103.85.
HSBC Corp. said the preliminary version of its monthly China purchasing managers index rose to 50.1 for August, a sharp improvement from July s 47.7 reading. Numbers above 50 indicate an expansion in activity.
The improvement in China s factory output was enough to push from the forefront worries that the Federal Reserve will begin to reduce its monetary stimulus soon.
The program was intended to push down interest rates and spark investment, but also weighed on the dollar s value. However, the dollar has crept up in recent days amid expectations that the Fed will gradually reduce its purchases of Treasurys and other bonds.
Michael Hewson of CMC Markets said oil prices "have stayed under pressure" as the dollar firms.
When the dollar rises, oil gets more expensive for foreign currency holders and thus losses some of its investment appeal.
Falling U.S. crude inventories, which suggest stronger demand for oil, also helped support prices. For the week ended Aug. 16, stockpiles of crude fell by nearly 1.2 million barrels to 364.1 million barrels, according to the American Petroleum Institute.
Brent crude, which sets prices for imported oil used by many U.S. refineries, was down 4 cents to $109.77 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
Heating oil rose 0.2 cent to $3.083 per gallon.
Natural gas rose 2 cents to $3.48 per 1,000 cubic feet.
Wholesale gasoline rose 0.7 cent to $2.825 per gallon.
