Oil Heads For Weekly Loss On Higher Production Levels, China Slowdown

Despite signs of economic growth in the United States, crude oil is heading for its first weekly decline in more than a month as a rising crude production showed supplies are abundant, weighing on prices.

The Energy Information Administration (EIA) revealed on Wednesday that crude production rose to 7.56 million barrels a day last week, the most since December 1990, making the market well supplied during the summer driving season.

Also dragging prices lower is the economic slowdown in China, the world’s second biggest oil consumer. Data showed this week that China`s manufacturing activity hit an 11-month low in July and its job market weakened.

"The market is focused on demand rather than supply. The weaker PMI numbers out of China… is contributing to that weakness, keeping prices under a little bit of pressure," said Natalie Rampono.

- Crude is trading around $104.79 a barrel after falling $0.71.

- Brent is trading around $107.26 a barrel after falling $0.39.

Losses however were limited on Thursday as the US dollar weakened, hovering near a more than one-month low against a basket of major currencies, increasing the appeal of the dollar dominated commodities such as oil.

Crude oil’s movement may be limited until next week when the US Federal Reserve will meet to decide on its monetary policy. The meeting may provide clues on when the US will start trimming its stimulus, a move that may tighten liquidity and boost the dollar.

Meanwhile, supply disruptions in the North Sea, Middle East and Africa are underpinning oil prices. The North Sea`s Forties pipeline has cut pumping rates because of maintenance while Iraq’s crude exports will be cut in September also due to maintenance at ports.

- Natural gas is trading at $3.636 per cubic feet after falling 0.022%.

- Gasoline is trading at $3.0238 a gallon after rising 0.23%.

- Heating oil is trading at $3.0233 a gallon after falling 0.39%.