Oil slips near US$97 a barrel on weak Chinese data, ahead of key US jobs report

The China Federation of Logistics and Purchasing's purchasing index stood at 50.4. That represented a shows slowdown in growth from prior month

February 1, 2013
by Canadian Press

The price of oil slipped to near US$97 a barrel Friday after figures showed weak growth in China’s manufacturing sector and as investors awaited a key US jobs report. In Europe, benchmark West Texas Intermediate crude for March delivery was down 32 cents to US$97.17 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 45 cents US on Thursday.

Two surveys released February 1 showed China’s manufacturing activity expanded in January, but growth was weak. The China Federation of Logistics and Purchasing said its purchasing managers’ index stood at 50.4. That represented a slowdown in growth from the prior month’s reading of 50.6. Separately, HSBC Corp said its PMI stood at 52.3 on a similar 100-point scale, up from December’s 51.5. Numbers above 50 indicate expansion. But market movement was limited as traders prepared for the release of the monthly U.S. payrolls report, which is expected to show steady jobs growth.

“If non-farm payrolls increased in January by more than December’s 155,000 gain, it seems likely that oil prices will strengthen in response,” said Caroline Bain, commodities analyst for The Economist Intelligence Unit. However, she said that significant or permanent price hikes are not expected because the market is well supplied and U.S. stockpiles are high.

Brent crude, used to price international varieties of oil, was up 55 cents to US$115.90 a barrel on the ICE Futures exchange in London. It was seen getting a boost from concerns about possible supply disruptions due to the conflicts in the Middle East.

“The growing geopolitical tensions are likely to give additional buoyancy to oil prices,” said a report from Commerzbank in Frankfurt. “Iran, for instance, has installed new uranium enrichment facilities. Furthermore, the crisis in the Middle East threatens to escalate further following Israel’s airstrikes on targets in Syria.”

In other energy futures trading on Nymex, wholesale gasoline lost 2.34 cents to US$3.0083 a U.S. gallon (3.79 litre), heating oil advanced 0.21 of a cent to US$3.1208 a gallon and natural gas added 2.4 cents to US$3.363 per 1,000 cubic feet.