NEW YORK (DTN) -- New York Mercantile Exchange oil futures were mostly higher Friday morning on technical support, but the complex’s upside was limited by a stronger dollar and soft manufacturing data from China and Europe. ICE Brent futures were lower at last look.
The oil futures complex dropped to new monthly lows this week, testing technical support levels, with the oil product contracts seesawing on either side of Thursday’s settlements.
NYMEX September West Texas Intermediate crude bounced off Thursday’s near four-month spot low of $48.21 bbl, but entered a bear market this week, which is defined as a 20% drop from peak. The WTI contract plunged nearly $15 bbl from an early May high of $62.58 to Thursday’s low.
The oil market has been under selling pressure from a glut of supply and a strengthening U.S. dollar, while concern over China’s economy has raised questions over expected growth in oil demand.
At 8 a.m. CDT, NYMEX September WTI crude futures rose 41 cents to $48.86 bbl while ICE September Brent crude was little changed, down 2 cents to $55.25 bbl.
In products trade, the NYMEX August ULSD futures contract was 0.33 cents higher at $1.6579 gallon while August RBOB futures were 0.04 cents higher at $1.8525 gallon.
On Wall Street, equities were mixed while the dollar bounced off a one-week low.
The broader market remains vulnerable to the downside after Markit showed purchasing managers’ index for China dropped to 48.2 points, the lowest level in 15 months and below an expected 49.7. Markit also said eurozone’s PMI dipped 0.2 to 52.2 points in July, raising the prospect oil demand would be reduced, analysts said.
On fundamentals, the oil market is oversupplied. The Energy Information Administration's data issued midweek showed an unexpected 2.5 million bbl crude stock build for the week ended July 17, lifting U.S. crude inventory to 463.9 million bbl, up 25.0% year on year.
Globally, the market is concerned that last week's nuclear deal would flood the market with additional supply from Iran. The Organization of Petroleum Exporting Countries is producing above the agreed 30 million bpd ceiling.
George Orwel can be reached at firstname.lastname@example.org
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