Oil prices fell today as China’s factory sector performance declined sharply in January to a level indicating contraction in business activity, which clouded future oil demand.
An index reading above 50 indicates expansion of the sector while a reading below 50 suggests contraction.
The manufacturing output index reached a three-month low of 51.3 in January from 51.4 in December.
New orders decreased in January after an expansion in December and new export orders fell for a second consecutive month and at a faster pace than in December.
But distillate stockpiles, which include diesel and heating oil, fell by 2.3 million barrels.
Oil traders are now waiting for the US Energy Information Administration (EIA) data on oil stockpiles, which is scheduled late today to gauge the demand outlook in the world’s top oil consuming country.
Oil futures surge after TransCanada began transporting crude through a major new pipeline from Oklahoma to the Gulf Coast, expected to help eliminate a bottleneck that has impacted the US oil market for three years.
Image: China’s factory sector activities contracted in January for the first time in six months. Photo: courtesy of Rawich.