Oil off session lows on ISM data

Oil rebounded from session lows but continued to trade lower after the Institute for Supply Management reported the U.S. services sector expanded at a faster pace in July than economists expected. Oil fell to days low earlier in the day as Libya reopened a port that was closed by protests.

On the New York Mercantile Exchange, WTI crude for September delivery traded at $106.66 a barrel at 14:41 GMT, down 0.26% on the day. Futures held in a wide range between days high at $107.69 and low of $105.71, after which a rebound followed. Light, sweet crude fell 0.83% on Friday as the U.S. Department of Labor released its controversial jobless statistics for July but WTI still closed the week 2.1% higher, the best performance since the week ending July 12.

Meanwhile on the ICE, Brent oil for delivery in September fell to $108.46 per barrel at 14:42 GMT, down 0.45% on the day. Prices ranged between days high at $109.43 and low of $107.58 per barrel. The European benchmark tumbled 0.43% on Friday but still snapped a two-week losing cycle and settled the week 1.7% higher.

Oil fell earlier in the day as Libyan Oil Minister Abdelbari al-Arusi said on Monday that the countrys output has risen to about 700 000 barrels per day and that the government was working to end the protests. Meanwhile, Libya reopened one of its terminals.

Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said for Bloomberg: “Some Libyan barrels are back on board and it looks like there is more to come. It looks like we’ll need a geopolitical event or positive economic indicator to make the market move higher.”

Prices were also pressured as Iran’s newly elected President Hassan Rouhani called for negotiations with the United States. The country’s oil exports were reduced by more than half due to U.S. sanctions that aimed to force Iran quit its nuclear program.

Meanwhile, disappointing economic data from Europe also weighed on oil. The single currency blocs retail sales fell for the first time in three months, signalling the Euro zones economy and energy demand are still fragile. On a monthly basis, retail sales fell by 0.5%, compared to Junes upward revised reading of 1.1% and forecasts for a 0.7% drop. On a year-on-year basis, the indicator tumbled 0.9%, below projections for a 1.3% fall, but underperforming the preceding periods upward revised 0.3% gain.

Also hurting the market, production in North Seas Buzzard oilfield, Britains largest, is expected to be restarted today after being down for maintenance for five days.

However, oil rebounded off day lows as unexpectedly upbeat U.S. data boosted oils demand prospects. The Institute for Supply Management reported at 14:00 GMT that the U.S. services sector rose with a lot faster pace in July than in June, hitting a five-month high. The ISM Non-Manufacturing Composite index surged to 56.0, well above analysts expectations for a jump to 53.1 from Junes 52.2 figure. Sixteen out of eighteen sectors that are tracked for the preparation of the index have marked an expansion in July, compared to fourteen in June. This boosted oils demand prospects in the worlds top consumer, allowing it to erase some of its previous daily losses.