Oil hovers below $89 as EU industry slows down
Oil prices slipped a bit further below $89 a barrel Thursday as reports of slowing industrial production in Europe overshadowed advancing stock markets in Asia.
By early afternoon in Europe, benchmark oil for October delivery was down 24 cents to $88.57 in electronic trading on the New York Mercantile Exchange. Crude fell 9 cents to settle at $88.81 on Wednesday.
In London, Brent crude for October delivery was down 47 cents at $114.38 on the ICE Futures exchange.
Crude has risen 17 percent from August 9 amid a growing consensus that the U.S. economy will see weak growth, but not contract, in the second half.
Oil traders often look to equities as a barometer of overall investor sentiment, and the Dow Jones industrial average has risen four consecutive days.
Asian stock markets gained Thursday after China said manufacturing increased in August. HSBC's purchasing managers' index rose for the first time in three months while a survey by an industry group also showed activity expanded slightly.
In Europe, however, stocks indexes were nearly all in the red, with Germany's DAX down by 1.6 percent and London FTSE 100 off by 0.2 percent. The retreat was blamed on surveys showing that the industrial sectors across the continent — a key growth factor for the eurozone — had contracted in August.
Some analysts also are concerned a struggling U.S. economy will undermine crude demand.
Crude supplies increased by 5.3 million barrels last week, the Energy Department's Energy Information Administration said in its weekly report. Analysts expected oil supplies to decline by 1.2 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos.
"A continued highly vulnerable macroeconomic environment still leaves open the possibility of a sharp and fast price plunge capable of negating the recent price upswing in matter of a couple of sessions," Ritterbusch and Associates said in a report.
In other Nymex trading for October contracts, heating oil lost 1.85 cents to $3.0655 per gallon and gasoline futures fell 1.36 cents to $2.8627 per gallon. Natural gas for October delivery rose 3.4 cents to $4.088 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.