Oil nears 4-month low as China factories contract

london — Oil prices neared fourmonth lows on Friday, set for their fourth straight week of declines, after data showed a contraction in China’s factories and the dollar rose against a basket of currencies.

“Concerns around the demand environment were heightened further on Friday by the PMI (Purchasing Managers’ Index) read out of China,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

Brent crude was down 28 cents at $54.99 a barrel by 1345 GMT, having hit an intraday low of $54.80, its lowest since early April. Brent has lost nearly 13 per cent in July, its largest one-month fall since a near 19 per cent loss in January, although downside has been less severe last week.

Prices traded in the tightest weekly range in 11 months, as strong seasonal demand, particularly for gasoline in the US summer driving season, helped mitigate the longer-term effect of a global supply glut.

This cushion, however, is likely to be short-lived.

“You have ... global crude runs peaking right now. The physical market has done a bit better because European refinery demand has been very strong. So this is as good as it gets for crude demand, but we’ve had this wealth of supply come down,” Chris Main, an oil strategist at Citi, said.

US crude for September delivery rose 12 cents to $48.57 a barrel, having settled on Thursday down 74 cents at $48.45, the lowest since March 31.

Both benchmarks have seen losses this month, partly due to a stronger dollar, which makes it more profitable for non-US investors to sell commodities, and partly on expectations of greater Iranian supply following last week’s deal over Tehran’s nuclear programme with world powers. tokyo — European stock markets held their ground on Friday despite an earlier retreat in Asia where investors were spooked by further evidence of a sizeable economic slowdown in China.

In Europe, the FTSE 100 index of leading British shares was unchanged at 6,656 while Germany’s DAX was steady at 11,508. The CAC-40 in France outperformed its peers, trading 0.4 per cent higher at 5,106. U.S. stocks were poised for a solid open, with Dow futures and the broader S&P 500 futures up 0.2 per cent.

The main movements took place in Asia after a closely watched indicator of China’s manufacturing sector slumped to a 15-month low in July — contrasting recent indicators suggesting the outlook for the world’s second-largest economy was stabilizing.

“Just one week after investors reacted positively toward China’s GDP attaining the government target at seven per cent, anxiety over the economic health of China has returned following the news that China’s factor sector had contracted the most in 15 months,” said Jameel Ahmad, chief market analyst at FXTM.

In the wake of the survey, China’s Shanghai Composite Index sank 1.3 per cent to 4,070.91. Japan’s Nikkei 225 fell 0.7 per cent to 20,544.53 and Hong Kong’s Hang Seng shed 1.1 per cent to 25,128.51. Australia’s S&P/ASX 200 fell 0.4 per cent to 5,566.10.

News that high-level talks between Greece and its European creditors on a third bailout for the cash-strapped country have been

An electronic board at a brokerage house in Nanjing. China’s equities fell 1.3 per cent on Friday, snapping a six-day winning streak.

— Reuters

delayed until logistical matters are sorted out had little impact in European markets.

Falling for the second straight day, the benchmark BSE Sensex on Friday slipped 258.53 points to end at nearly two-week low of 28,112.31 on muted earning figures reported by companies so far and weak global cues.

The 30-share BSE barometer fell by 258.53 points or 0.91 per cent to 28,112.31, with all the sectoral indices, except consumer durables and FMCG, ending in negative zone. The gauge has now lost 392.62 points in two days. The NSE Nifty ended 68.25 points or 0.79 per cent down at 8,521.55 after shuttling between 8,513.50 and 8,589.15 intraday.

Investors are expecting the US Federal Reserve to raise interest rates for the first time since the global financial crisis though views are split on whether that will happen in September or December. Ultra low interest rates have been a boon for stock markets worldwide for several years and the start of US rate hikes is likely to ruffle markets. The Federal Reserve Open Market Committee has a two-day policy meeting next week.

“While almost no one is expecting the Fed to raise interest rate in the July meeting, everyone is watching for their comments, particularly on the economic and inflation outlook,” said Bernard Aw, market strategist at IG in Singapore.

months’ low China factory output in July