NEW YORK – Oil prices edged higher on Tuesday as better-than-expected U.S. manufacturing activity data spurred hope for a post-pandemic economic recovery, and as analysts forecast a sixth weekly drawdown in U.S. crude inventories.
Brent crude LCOc1 futures settled up 30 cents at $45.58 a barrel. U.S. West Texas Intermediate futures CLc1 settled at $42.76 a barrel, up 15 cents. Futures extended gains slightly in post-settlement trade after trade group the American Petroleum Institute (API) said U.S. crude stockpiles fell more than expected in the latest week.
“Everyone is looking for a draw, of one degree or another, in the API this afternoon,” said Bob Yawger, director of energy futures at Mizuho in New York, ahead of the data. “The manufacturing numbers and the bullishness around the AstraZeneca virus vaccine added to the optimism,” he said.
U.S. crude inventories were forecast to have fallen by nearly 2 million barrels last week, according to analysts in a Reuters poll ahead of weekly data from the American Petroleum Institute. The group said stockpiles fell by 6.36 million barrels in the week.
U.S. manufacturing activity accelerated to a more than 1-1/2-year high in August amid a surge in new orders, but employment continued to lag, supporting views that the labor market recovery was losing momentum.
The Institute for Supply Management (ISM) said its index of national factory activity increased to a reading of 56.0 last month from 54.2 in July. That was the highest level since January 2019 and marked three straight months of growth.
AstraZeneca has expanded its previous agreement with Oxford Biomedica to mass-produce the British drugmaker’s COVID-19 vaccine candidate, as it looks to scale-up supply ahead of a possible fast-track approval from the United States.
Strong Chinese manufacturing data also lifted oil prices, said Jeffrey Halley, a senior market analyst at OANDA.
The Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) showed China’s factory activity expanded at the fastest pace in nearly a decade last month, bolstered by the first increase in new export orders this year.
Bulls also pushed up equities, with the MSCI world equity index .MIWD00000PUS close to a record peak on Tuesday.
Yet oil, which often moves in tandem with equities, remains reined in by demand concerns.
In a Reuters poll of 43 analysts and economists, global oil demand was seen contracting by between 8-10 million barrels per day (bpd) versus July’s 7.2-8.5 million bpd consensus.