By Adedapo Adesanya
Crude oil prices spiralled downward on Monday, erasing the gains it earlier garnered when the Brent crude topped $46.50 per barrel in early trading, reaching its highest level in over 5 months.
Later in the day, the price of the international crude benchmark went down by 25 cents or 0.59 per cent to $45.54 per barrel, while the United States West Texas Intermediate (WTI) crude fell by 17 cents or 0.40 per cent to quote at $42.80 per barrel.
Prices had found support early Monday after data showed a stronger-than-expected pickup in China’s service sector and then moved broadly lower as uncertainty continues to surround the outlook for demand.
China’s crude imports in September are set to fall for the first time in five months as record volumes of crude are stored in and outside of the world’s largest importer, depressing prices.
A survey showed that China’s services sector grew at its fastest pace in over two and a half years in August. The so-called Non-Manufacturing PMI, together with the Manufacturing PMI are important sentiment gauges for the health of the economy.
The country’s official non-manufacturing purchasing managers index rose to 55.2 in August, up from 54.2 in July, the National Bureau of Statistics said Monday. The August reading was the sixth consecutive expansion after the gauge in February was fell well below the 50 mark, which separates expansion from contraction.
As Monday marked the end of the month, the early gains spurred the global benchmark to a 4.5 per cent rise for the month to tally a fifth monthly climb in a row while the US benchmark crude saw a monthly gain of 5.8 per cent, which represented a fourth straight monthly climb.
The markets shrugged off the hurricane’s impact on Friday as energy companies continued efforts to restore operations at US Gulf Coast offshore platforms and refineries shut before the storm.
Majorly on Monday, demand sentiments heavily influenced what would have been a positive day for the market.
The US dollar has continued to weaken versus major rivals, a weaker dollar is seen as supportive to commodities priced in the currency, making them less expensive to users of other currencies.
Dipo Olowookere