Crude oil hovers close to 5-week low on U.S. demand concerns

Forexpros – Crude oil futures were down for a third day on Tuesday, hovering close to a five-week low as downbeat U.S. manufacturing data added to mounting concerns over the demand outlook of the world’s largest oil consumer.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD93.99 a barrel during European morning trade, dropping 1.3%.       

It earlier fell as much as 1.36% to trade at a daily low of USD93.94 a barrel, hovering close to the previous session’s five-week low of USD93.44 a barrel.

Data on Monday showed that the U.S. Institute for Supply Management's Manufacturing Index grew at its slowest pace in two years in July, adding to concerns over the health of the world’s largest economy.

A separate report said that China's purchasing managers' index declined to 50.7 in July from June's 50.9. A reading of below 50.0 indicates contracting activity.

The U.S. and China are the world’s two largest oil consuming nations and manufacturing numbers are used as indicators for fuel demand growth.

Meanwhile, the U.S. House of Representatives passed a bill to raise the U.S. debt ceiling by at least USD2.1 trillion late Monday. The U.S. Senate was expected to vote in favor of the bill later in the day.

However, concerns that the deal to raise the U.S. debt ceiling would not be sufficient to prevent ratings agencies from cutting the U.S. sovereign debt rating continued to weigh.

Markets were awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world’s largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show stockpiles climbed by 1.5 million barrels last week, while gasoline stockpiles were projected to rise by 0.5 million barrels.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for September delivery shed 0.75% to trade at USD116.03 a barrel, up USD22.04 on its U.S. counterpart.

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