Brent Falls Below $57
Brent crude prices edged below $57 a barrel on Wednesday as weak Chinese manufacturing data and demand concerns outweighed supply disruptions in Libya.
China's factory sector shrank for the first time in seven months in December, with the final HSBC/Markit Purchasing Managers' Index (PMI) for this month coming in at 49.6. Business Insider's Sam Ro wrote about this here.
Brent was trading at $56.95 at 9 am GMT (4 am ET). Here is a chart:
"Clearly, demand concerns are one of the issues for the oil market," said Michael McCarthy, chief market strategist at CMC Markets.
China is the world's second largest oil consumer and any contraction in its factory sector can have a big impact on demand.
US crude for February delivery was down 34 cents to $53.78.
This came after yesterday both Brent and US crude hit their lowest levels since May 2009.
This chart shows the US crude performance all year long:
"If we see a (PMI) number well under 49.5, it might spark further stimulus speculation and that might end up being supportive," McCarthy said of the HSBC/Markit reading.
Prices were also pressured by an unexpected build in U.S. crude stocks.
U.S. crude inventories rose by 760,000 barrels last week to 387.3 million, according to industry group the American Petroleum Institute, compared with analysts' expectations for a decrease of around 100,000 barrels. [EIA/S][API/S]
The Obama administration on Tuesday bowed to months of growing pressure over a 40-year-old ban on exports of most domestic crude, taking two steps expected to unleash a wave of ultra-light shale oil onto global markets.
Global supplies are still seen as overwhelming demand even with fighting in Libya cutting crude output there.
A fire raging for almost a week at Libya's biggest oil port of Es Sider has destroyed up to 1.8 million barrels of crude and damaged seven storage tanks, top oil official al-Mabrook al-Buseif said on Tuesday.
The turmoil in Libya has caused the Organization of the Petroleum Exporting Countries' oil supply to shrink 270,000 barrels per day (bpd) in December to a six-month low below OPEC's target of 30 million bpd.