Prices for benchmark U.S. crude-oil futures fell Wednesday, with energy-demand prospects in focus following a weak reading for manufacturing activity in China, the world's second-largest oil consumer, and ahead of more U.S. oil-supply data. Oil for September delivery was down 25 cents, or 0.2%, in electronic trade to $106.96 a barrel. The contract lost ground after the so-called "flash" version of HSBC's Chinese manufacturing Purchasing Managers' Index dropped to an 11-month low, at 47.7. Any reading below 50 indicates contraction, and many analysts cited expectations for the index to remain at or near June's 48.2 level. And looking ahead to final version of the July PMI, Kim Eng Securities strategist Andrew Sullivan told clients "there is scope for a further downside revision." The soft China manufacturing data arrived a day after a Platts analysis of Chinese government data showed a jump in China's oil demand compared with a year ago. China's apparent oil demand climbed by 11.7% to average 9.99 million barrels per day, with apparent demand for oil in June at the highest level since February 2011. Energy investors will likely weigh the soft PMI China data against a report due later Wednesday that may show a decline in weekly U.S. crude-oil supplies. The Energy Information Administration's report is scheduled for release at 10:30 a.m. Eastern time. The American Petroleum Institute said late Tuesday that crude-oil supplies fell 1.4 million barrels for the week ended July 19, according to sources. Analysts surveyed by Platts had expected a decline of 2.6 million barrels. The API also said gasoline stockpiles fell 900,000 barrels, and distillate supplies were down 700,000 barrels. That compared with expectations for gasoline supplies to rise by 800,000 barrels, and an increase of 1.9 million barrels in distillates. The data from the API were "mixed, but arguably supportive on balance," Citi Futures energy-futures specialist Tim Evans wrote to clients. "Product inventories declined slightly as a moderately bullish surprise." Before the API's report, oil futures rose 29 cents, or 0.3%, to settle at $107.23 a barrel on the New York Mercantile Exchange. In other Wednesday action, August gasoline rose 1 cent, or 0.5%, to $3.07 a gallon, and August heating oil was unchanged at $3.07 a gallon. August natural gas slipped 1 cent to $3.73 per million British thermal units. Source : Marketwatch
