Investing.com - Crude oil futures traded lower during U.S. afternoon hours Tuesday, as the U.S. Institute for Supply Management’s report indicated a slowing economy.
Hopes for fresh action by the European Central Bank further supported market sentiment, ahead of the central bank’s policy meeting on Thursday.
On the New York Mercantile Exchange, light sweet crude futures for delivery in October traded at USD95.31 a barrel during U.S. afternoon trade, falling 1.17%.
Earlier in the day, prices rose by as much as 0.9% to trade at a session high of USD97.36 a barrel, which was the strongest level since August 27.
Starting the oil sell off, manufacturing activity in the U.S. contracted for the third consecutive month in August, adding to expectations the Federal Reserve will implement fresh stimulus measures to boost growth, industry data showed on Tuesday.
In a report, the Institute for Supply Management said its index of purchasing managers fell by 0.2 points to 49.6 in August from a reading of 49.8 in July.
Analysts had expected the ISM index of purchasing managers to ease up by 0.2 points to 50.0.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Oil futures were higher earlier in the session as market sentiment improved after ECB President Mario barrel.
Earlier in the day, prices touched a session high of USD116.60 a barrel, the strongest level since May 3.
Brent prices have been well-supported in recent weeks, rallying nearly 23% from the lows touched in June, amid growing concerns over tightening supplies from the North Sea region and following the launch of Western-led sanctions targeting Iranian oil exports on July 1.
Draghi indicated on Monday that he would be comfortable buying bonds with maturities of up to about three years, saying that it would not constitute state financing.
At its policy meeting on Thursday, the ECB is expected to announce the details of a long awaited debt-buying program designed to help ease funding pressures for indebted euro zone countries.
Prices also drew support from growing speculation the Federal Reserve was moving closer to stimulate growth in the U.S. economy, following a speech by Fed Chairman Ben Bernanke last Friday.
Speaking at the Fed’s annual symposium in Jackson Hole, Wyoming, Bernanke said the Fed would act as needed to strengthen the U.S. economic recovery, but stopped short of indicating that a fresh round of stimulus is imminent.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery shed 0.2% to trade at USD115.53 a barrel, with the spread between the Brent and crude contracts standing at USD18.99.