Oil steady despite weak Chinese data
Oil steadied today, despite Chinese data showing a deepening slowdown in the world's biggest energy consumer, as investors focused on the possibility of more stimulus measures and other moves to try to revive economic growth.
China's factories have been hit by slowing orders, two major surveys showed today, suggesting the slowdown in the world's number two oil user could be worsening.
The figures prompted a new round of speculation that governments would act sooner rather than later to increase money market liquidity to encourage bank lending, a move that would almost certainly boost commodities and oil.
Trading volumes were limited, with US financial markets closed for the Labour Day holiday.
Brent October futures were up 17 cents at $114.74 per barrel by noon GMT after jumping nearly $2 on Friday. US crude futures eased 15 cents to $96.32.
Both contracts rose more than 9 per cent in August, driven by supply concerns and hopes for stimulus from the Federal Reserve.
"The Chinese data is very gloomy and suggests that the world economy is slowing," said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt.
"But the market impact is rather limited as it raises hopes of more economic stimulus measures," he said.
"Hopeful of central bank measures, speculative financial investors are increasingly betting on rising prices."
China's official factory purchasing managers' index (PMI), one of the early indicators of the state of the economy, fell to a lower-than-expected 49.2 in August, the National Bureau of Statistics said on Saturday.
It was the first time since November 2011 that the number has fallen below 50, which separates expansion from contraction, and followed last week's flash PMI for August, which hit a nine-month low.
Together, the two manufacturing surveys could strengthen the case for further policy steps to bolster growth.