NEW YORK (DTN) — New York Mercantile Exchange oil futures were mixed with a downside bias during overnight trade amid signs of weak crude and products demand, though the losses were curbed by optimism about global economic growth.
The Energy I
nformation Administration’s data on Wednesday showed a 4.2 million bbl build for U.S. crude inventories last week, with implied demand for products sluggish.
The EIA data prompted profit taking after oil prices rallied earlier following data showing the purchasing managers’ index for manufacturing expanding in the United States, Germany and China.
U.S. manufacturing grew in January at the fastest pace in seven months as exports rose, the Institute for Supply Management said Wednesday, while the Commerce Department said construction spending rose 1.5% in December, the fifth straight monthly gain.
Despite an upbeat outlook for global factory activity, oil traders remain cautious ahead of testimony before a Congressional panel later today by Federal Reserve Chairman Ben Bernanke.
The Fed chief last week prompted a broader market rally after signaling that additional quantitative easing was in the cards as a full economic recovery could take at least three more years.
Also in the background are risks to oil supply from Africa and Iran that could support the upside for oil prices.
U.S. lawmakers are considering more sanctions targeting Iran’s state oil company as well as top Iranian leaders. These U.S. measures would come on top of an oil embargo by the European Union agreed last week that will take effect in July.
In Africa, an ongoing dispute over transit fees between Sudan and South Sudan led to the shut-in of 350,000 bpd of crude while Nigeria slipped deeper into turmoil, which added to supply fears, after security forces arrested the leader of a militant Islamist group.