Brent oil dips below $102 amid weak U.S. data

After rebounding from a one-month low of under $100 per barrel yesterday, Brent crude rebounded above $102, supported by weaker dollar and a North Sea outage. Following disappointing U.S. economy data on Monday, Brent oil slipped below $102 as concern about demand was spurred in the worlds biggest oil consumer, which accounts for 22% of the global consumption.

Brent for July delivery traded at $101.86 at 7:13 GMT.

The ISM Manufacturing index mismatched predictions by 1.7% and plunged below the neutral level of 50. The value for May stands at 49, significantly below the 50,7 reading for the previous month and the 50,7 forecast.

The Construction Spending indicator for April showed a more positive value, but still missed preliminary estimates. The indicator was supposed to reach 1.0%, up from a revised decrease of 0,8% for the preceding month, but it stood at 0,4%.

Yusuke Seta, a commodity sales manager at Newedge Japan said for Reuters: “Oil will remain unstable because of speculation over the Feds quantitative easing.” He also said that uncertainty over demand growth and the weakness in the dollar will keep Brent trading in a tight range between $100 and $105 over the next few days.

Brent oil plunged after OPEC’s meeting in Vienna on May 31 where leaders decided not to change the 30 million barrels per day output ceiling. Further pressure on oil prices, both Brent and WTI, was put by disappointing economic data from China on Saturday, which spurred concern about demand as the Asian country is the second biggest world oil consumer and accounts for more than 10% of the global consumption.

Yasuke Seta said: “Fundamentally oil is very weak. Supplies are ample and demand growth is slowing.”

Oil traders are now looking ahead into APIs and EIAs reports on crude oil reserves and gasoline stockpiles. According to a preliminary Reuters poll, gasoline inventories should have risen by 600 000 barrels and distillate stocks are forecast to have increased by 1.3 million barrels. Crude stocks should have fallen by 200 000 barrels.