Oil futures fell early Monday, feeling pressure after a weak reading on China factory activity and a widening of COVID-19 curbs by the country. Previously beaten-down natural-gas futures, however, were soaring.
- West Texas Intermediate crude for December delivery CL.1, -1.17% CL00, -1.40% CLZ22, -1.17% fell $1.26, or 1.4%, to $86.64 a barrel on the New York Mercantile Exchange.
- December Brent crude BRNZ22, -0.94%, the global benchmark, was down $1.12, or 1.2%, at $94.65 a barrel on ICE Futures Europe, while January Brent BRN00, -0.86% BRNF23, -0.86%, the most actively traded contract, declined $1.19, or 1.3%, to $92.58 a barrel.
- Back on Nymex, December natural gas NGZ22, +8.50% surged 10.5% to $6.281 per million British thermal units, nearly halving its October loss to 10.9%, according to FactSet.
- November gasoline RBX22, -1.60% fell 1.9% to $2.853 a gallon, while November heating oil HOX22, -4.16% was up 0.4% at $4.569 a gallon.
Oil was under pressure after China’s official gauges for measuring factory, construction and service activities all fell into contraction territory in October, underlining fears about economic weakness — and crude demand — by the world’s second-largest economy.
The official manufacturing purchasing managers index fell to 49.2 in October, compared with 50.1 in September, the National Bureau of Statistics said Monday. Economists polled by The Wall Street Journal had, on average, looked for a reading of 49.7. A reading of less than 50 indicates a contraction in activity.
China’s official nonmanufacturing PMI, which covers service and construction activity, fell to 48.7 in October from 50.6 in September, weighed down by the slumping service sector and slower growth in construction activity, according to the statistics bureau.
Meanwhile, news reports said Chinese cities were expanding COVID-19 lockdowns in an effort to control the spread of the virus. Lockdowns have been blamed for curtailing crude imports by China and weighing on economic activity.
“Investors have been disappointed by today’s Chinese PMI data falling short, below expectations,” with the reading reviving “fears of both slower growth and oil demand” and limiting risk appetite, said Pierre Veyret, technical analyst at ActivTrades, in emailed comments.
Natural-gas futures remained volatile, building on last week’s 3.9% rebound.
The Monday bounce is a continuation of recent developments around renewed liquefied natural-gas flows, with U.S. prices staring to recover after more than halving over the past two months, said Ole Hansen, head of commodity strategy at Saxo Bank.
A stronger-than-expected build in U.S. inventories has started to slow as flows to LNG exporting plants, which had been curtailed in part due to a fire at a major Texas facility, have picked up the pace, tightening domestic supplies, he said.
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Barbara Kollmeyer contributed to this article.