Oil dropped from the highest close in a week in New York as manufacturing contracted unexpectedly in China, raising speculation that fuel demand may decline in the world’s second-biggest crude consumer.
Futures slid as much as 1 percent after capping the biggest quarterly gain since December on Sept. 28. China’s Purchasing Managers’ Index was 49.8 in September, the government said today. That compares with the median forecast of 50.1 in a Bloomberg survey. An index from HSBC Holdings Plc and Markit Economics showed an 11th contraction. Data released later today is expected to show U.S. output shrank a fourth month.
“China PMI was not so good,” said Ken Hasegawa, a sales manager at Newedge Group in Tokyo. “Eleven straight months of negative numbers has had some bearish impact on oil prices.”
Crude for November delivery fell as much as 93 cents to $91.26 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.50 at 2:31 p.m. Singapore time. It climbed 0.4 percent on Sept. 28 to $92.19, the highest close since Sept. 21. Prices rose 8.5 percent in the third quarter.
Brent oil for November settlement dropped 53 cents to $111.86 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to New York crude was at $20.37, after closing at a six-week high of $20.20 on Sept. 28.
Oil’s decline in New York may stall along its 100-day moving average, at $90.10 a barrel today, according to data compiled by Bloomberg. Futures last week rebounded after falling to this indicator. Buy orders tend to be clustered near technical-support levels.
China’s manufacturing shrank for a second month for the first time since 2009, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today. The report added to signs that growth is at risk of reaching a 22-year low as the ruling Communist Party prepares to begin installing a new generation of leaders next month.
OPEC production fell the most in 18 months in September, led by reductions in Angola and Nigeria, a Bloomberg survey showed. Output in the 12-member Organization of Petroleum Exporting Countries slipped 454,000 barrels, or 1.4 percent, to an average 31.979 million barrels a day last month from a revised 32.433 million in August, according to the survey of oil companies, producers and analysts.
The oil market is well supplied and there’s no scarcity, OPEC’s secretary-general, Abdalla El-Badri, said in a speech in Berlin on Sept. 28. September output in Iran, the group’s third-biggest producer, climbed 100,000 barrels a day to 2.85 million, according to the survey. August production dropped to 2.75 million barrels a day, the lowest level since February 1990.
Sanctions aimed at stopping the Islamic republic’s nuclear program have hindered its ability to export crude. A European Union ban on the purchase, transport, financing and insurance of Iranian oil went into effect on July 1.
New York oil prices advanced a second day on Sept. 28 after the White House said President Barack Obama and Israeli Prime Minister Benjamin Netanyahu are in “full agreement” on preventing Iran from getting a nuclear weapon.
Money managers reduced wagers on rising prices for the first time in six weeks, cutting net-long positions by 17 percent in the seven days ended Sept. 25, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Sept. 28. It was the biggest reduction since May 8.