Crude oil futures sank over 1 per cent in the domestic market on Monday as investors and speculators exited positions in the energy commodity tracking a Slow trend in the overseas market as an eighth straight contraction in Chinese manufacturing activity signaled a worsening economic slowdown in the world’s second biggest oil consuming nation, darkening the demand outlook for the fuel.
China’s Caixin manufacturing index stood at 48.3 in October, while up from September’s six and a half-year low of 47.2, but remaining well below the neutral 50-mark.
Meanwhile, manufacturing in the US grinded to a halt last month as the ISM US Manufacturing PMI remained unchanged at 50.1, signaling concerns over the health of the world’s big economy, clouding the demand outlook for the fuel.
Russia’s oil production hit a post-Soviet high of 10.8 million barrels per day in October, worsening concerns over a global supply glut.
Meanwhile, despite a drop in US rig counts in recent weeks, US production at around 9 million barrels per day remains close to levels not seen since early 1970s and inventories are at the highest level in at least 80 years, a sign that the oil market remains more than adequately supplied.
Oil may rebound today as a pickup in Euro area manufacturing bolsters demand outlook.
At the MCX, Crude oil futures, for the Nov 2015 contract, closed at Rs 3,033 per barrel, down by 1.14 per cent, after opening at Rs 3,052, against the previous close price of Rs 3,068. It touched an intraday low of Rs 3,007.
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