Oil Drops on Chinese Low PMI

Brent crude fell with West Texas Intermediate as a measure of Chinese manufacturing missed estimates. The spread between the grades was near the widest in two months after stockpiles at Cushing, Oklahoma, surged the most since October.

Futures declined as much as 1 percent in London and New York. A preliminary Chinese Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics slid to 50.3 for August. A median 51.5 was projected in a Bloomberg News survey. Crude inventories at Cushing, the delivery point for WTI, rose 1.755 million barrels in the seven days ended Aug. 15 to 20.155 million, the Energy Information Administration said in a report yesterday.

Inventories at the hub have risen for three weeks after a fire shut down CVR Energy Inc.’s refinery in Coffeyville, Kansas on July 29. The plant uses supplies from Cushing. Speculation the refinery would restart widened the premium of front-month WTI over later contracts, known as backwardation. Brent is in the reverse scenario, known as contango.

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza