WASHINGTON (DTN) -- New York Mercantile Exchange oil futures and Brent crude traded on the Intercontinental Exchange moved mixed in early trade on the last session in September and the third quarter, although all petroleum contracts are on track for their first quarterly losses since 2020 amid concerns over rapidly deteriorating global demand growth hammered by high inflation and aggressive rate hikes from several central banks.
Manufacturing data out of China, released overnight, revealed the world's second largest economy struggled to rebound at the end of the third quarter, with factory activity contracting at a sharper pace in September than in the prior two months. China's Caixin manufacturing index fell 1.4 points from late August to 48.1, down for the second consecutive month and well below the 50-point threshold that separates growth from contraction.
"Weakening global demand for Chinese goods weighed heavily on the manufacturing sector, with new export orders shrinking at the fastest pace since May," read comments with the data release.
With central banks around the world rushing to restrict the flow of credit and raise interest rates, the demand for Chinese manufacturing goods is unlikely to improve markedly in the fourth quarter.
September's data suggest the European economy has already fallen into recession, while the Federal Reserve is unlikely to manage a soft landing for the U.S. economy as it steps up its fight against broadening inflation.
Federal Reserve Bank of Cleveland President Loretta Mester reiterated on Thursday that the central bank, which has raised the benchmark federal funds rate 3% this year, must continue aggressively in lifting rates even if that sends the economy into a downturn.
The same sentiment has been echoed in comments from St. Louis Federal Reserve Bank President James Bullard who believes the market has finally gotten the message of the central bank's resolve to fight inflation. A stronger-than-expected jobless claims report released Thursday morning didn't help sentiment, suggesting the persistence of inflation and building on the notion that the Federal Reserve will need to remain aggressive with rate hikes. Weekly unemployment claims fell below 200,000 to 193,000 last week, according to the Department of Labor, the lowest since early May.
Later Friday morning, investors will take a closer look at consumer sentiment in the United States, with markets anticipating an unchanged reading of 59.5 for late September.
U.S. equity futures powered higher early Friday as investors looked to close out the worst month for the S&P 500 since 2008 on a firmer note, helped in part to a modest pullback in Treasury yields. The S&P 500 is down just under 8% for the month after hitting a November 2020 low this week. Futures contracts tied to Dow Jones Industrials are priced for a 235-point drop Friday morning. Futures tied to the tech-focused Nasdaq are indicating a 100-point move to the upside.
Near 8 a.m. EDT, November West Texas Intermediate futures slipped $0.29 to $80.92 barrel (bbl). ICE November Brent futures traded little changed near $88.50 bbl ahead of expiration Friday afternoon, with the December contract expanding its discount to November delivery to $1.67 bbl.
NYMEX October RBOB futures fell 3.26 cents to $2.4750 gallon, with the November contract trading near $2.3696 gallon. The October ULSD contract declined 7.11 cents to $3.3435 gallon, widening its premium to the November contract to 10.93 cents. October products futures also expire Friday afternoon.
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