NYMEX crude weaker in Asia despite China rate cut, solid PMI data

Investing.com - Crude oil prices dipped in Asia on Monday with investors focused on slow demand prospects even as China moved aggressively at the weekend to kickstart growth underlined by upbeat data.

West Texas Intermediate oil futures fell 0.83% to $49.35 a barrel on the New York Mercantile Exchange.

The HSBC China final manufacturing index for February rose to 50.7 into the expansion zone and above the flash reading of 50.1.

On Saturday, the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 5.35%.

Also at the weekend, the February China Federation of Logistics and Purchasing (CFLP) manufacturing PMI improved for the first time in seven months, despite the Chinese New Year holiday, but remained just below the 50 mark, indicating that the sector contracted for a second straight month. The index rose to 49.9 in February from 49.8 in January. China is the world's No. 2 oil importer.

On Monday, Australia's AI Group PMI fell 3.6 points to 45.4 in February, data released Monday showed. Also, the Melbourne Institute inflation gauge was flat in February, compared to a 0.1% expectation found in January. Business inventories in the fourth quarter in Australia fell 0.8%

In Japan, CAPEX data for non-financial firms rose 2.8% in the fourth quarter.

Last week, crude oil futures rallied sharply on Friday, to record the first monthly gain in seven months, amid speculation productions cuts by drillers in the U.S and global oil companies will alleviate a glut in supplies.

The sharp increase continued the trend of volatile price fluctuations, as prices have wavered dramatically over the last several weeks. Daily oil prices have moved more than 2% in an up or down direction in 25 of the last 38 trading days.

Industry research group Baker Hughes (NYSE:BHI) said Friday that the number of rigs drilling for oil in the U.S. fell by another 33 last week to 986, the lowest since June 2011.

The number of oil rigs has declined in 17 of the last 20 weeks since hitting an all-time high of 1,609 in mid-October.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

However, total U.S. crude oil inventories stood at 434.1 million barrels as of last week, the most in at least 80 years, indicating that cheap prices have yet to affect output.

Elsewhere, on the ICE Futures Exchange in London, Brent for April delivery surged $2.53, or 4.21%, on Friday to settle the week at $60.05 a barrel by close of trade.

Saudi Arabian oil minister Ali al-Naimi said earlier in the week that oil markets have settled down after a prolonged period of volatility late last year.

Oil prices have fallen sharply in recent months as the Organization of Petroleum Exporting Countries resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.

Data on Friday showed that the U.S. economy grew 2.2% in the fourth quarter, down from an initial estimate of 2.6%. In the third quarter, the economy expanded at rate of 5%.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market.

On Monday, the euro zone is to produce preliminary data on consumer prices and a report on unemployment.

In the U.S., the Institute of Supply Management is to report on manufacturing activity.