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Oil tracks gains in stocks, erases early losses; US pump price at $3.66 as weekend nears

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(Globalpost/GlobalPost)

NEW YORK, N.Y. - An afternoon recovery in U.S. stock markets helped oil reverse early losses Thursday.

Benchmark West Texas Intermediate crude for July delivery fell three cents to close at US$94.25 a barrel on the New York Mercantile Exchange.

The price sank as low as $92.21 in the morning after weak manufacturing data from China raised questions about the strength of oil demand in the world's No. 2 economy.

Global stock markets showed sharp declines amid indications that the U.S. Federal Reserve's may pull back on its economic stimulus program. Tokyo's Nikkei 225 index of shares fell 7.3 per cent.

But U.S. stocks recouped most of their losses by midday, with the Dow finishing the day down just 12.67 points at 15,269.93. Oil traders followed, at one point pushing oil to a small gain.

HSBC Corp. said a preliminary version of its monthly purchasing managers' index fell to 49.6 for May from 50.4 in April. Numbers below 50 indicate contraction. That sank oil prices because a downturn in energy-hungry China would likely lead to a decline in crude demand.

Ample U.S. supplies of crude oil and refined products such as gasoline continue to weigh on oil prices, even as the summer driving season gets underway in the U.S. with Memorial Day weekend.

"Ahead of the start of the summer driving season, (gasoline) stocks are six per cent up on the long-term average and 10 per cent higher than last year's level," said a report from Commerzbank.

Brent crude, a benchmark for many international oil varieties, fell 16 cents to US$102.44 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex, wholesale gasoline rose one cent to US$2.83 a U.S. gallon (3.79 litres), heating oil lost one cent to US$2.86 a gallon, and natural gas rose eight cents to US$4.26 per 1,000 cubic feet.

(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)

http://www.globalpost.com/dispatch/news/the-canadian-press/130523/oil-falls-below-93-china-manufacturing-contracts-may