U.S. manufacturing output unexpectedly fell in January, recording
its biggest drop in more than 4-1/2 years, in the latest indication
the economy got off to a weak start this year. Worries over
consumption may keep the two oil benchmarks trading in a narrow
range as investors await more data due later in the week to gauge
the global demand outlook.
Brent crude slipped 15 cents to $108.93 a barrel by 0351 GMT, after
gaining to $109.40. U.S. oil gained 28 cents to $100.58.
"I don't expect oil to rise or fall much from current levels," said
Ken Hasegawa, a commodity sales manager at Newedge Japan. "The
market is now looking for more economic indicators to gauge the
outlook for oil demand, particularly from the United States and
Hasegawa expects Brent to trade between $108.50 and $110 a barrel
during the day, with the U.S. benchmark swinging in a $99.50 to
$101.20 range. Prices are also likely to remain rangebound, with
thin volumes, because of a holiday in the United States on Monday.
The next set of key data is the HSBC flash PMI survey of
manufacturers for February, due on Thursday.
U.S. manufacturing joined weak retail sales and employment data in
suggesting that cold weather had spurred a step-back in economic
growth early in the first quarter after a strong performance in the
second half of 2013.
Investors are also awaiting minutes of the February policy meeting
of the Federal Reserve due on Wednesday. Fed Chair Janet Yellen also
has to appear before the Senate after her testimony was postponed
due to bad weather, but no firm date has been set as yet.
[to top of second column]
In addition to the cold spell that is boosting oil demand in what is
seasonally a weak consumption period, crude futures drew support
from the dollar, which languished at a six-week low against a basket
of major currencies. A weak dollar supports commodities such as oil
that are priced in the currency.
Support also came from better Chinese data that showed banks
disbursed the highest volume of loans in any month in four years in
January, a surge that suggests the world's second-biggest economy
may not be cooling as much as some fear.
Supply disruption fears continued to put a floor on prices. Libya's
oil production has fallen to 390,000 barrels per day as protests
have partly blocked flows from the El Sharara oilfield, the state
National Oil Corp (NOC) said.
Protesters led by a former anti-Gaddafi rebel have seized three oil
ports in eastern Libya since August, cutting off around 600,000 bpd
of export capacity, to demand more regional autonomy and a greater
share of oil wealth.
(Editing by Muralikumar Anantharaman)
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