By Eric Yep
Crude-oil futures were steady in Asian trading hours Thursday
supported by a larger-than-expected drop in U.S. oil stocks and
positive China manufacturing data.
On the New York Mercantile Exchange light, sweet crude futures
for delivery in September traded at $103.10 a barrel at 0530
GMT--down $0.02 in the Globex electronic session. September Brent
crude on London's ICE Futures exchange rose $0.17 to $108.20 a
barrel.
Oil gained overnight after U.S. crude-oil stocks fell by almost
4 million barrels in the week ended July 18--much more than market
expectations for a fall of 2.5 million barrels and indicating
strong demand.
"In the short term we expect U.S. crude runs to hold steady at
peak summer levels. However, if refining margins continue to fall,
fast run cuts cannot be ruled out," Societe Generale said in a
report.
The HSBC China preliminary manufacturing Purchasing Managers'
Index rose to 52 in July from 50.7 a month earlier representing an
18-month high and indicating stronger growth in China--bullish for
oil demand.
Meanwhile, the U.S. said the downing of Ukrainian military jets
on Wednesday illustrates Moscow's support for pro-Russia
separatists in Ukraine. The European Union is also expected to
present options for broader sanctions against Russia later
Thursday.
However, sanctions against Russia's state-run oil company
Gazprom--which holds the monopoly on exporting pipeline gas--aren't
in the EU's interest, Societe Generale said. "Gazprom provides 26%
of the gas consumed at [the] European level. It is simply not
possible, on short- or medium-term notice, to replace those
volumes," Societe Generale analyst Dr. Thierry Bros said.
Nymex reformulated gasoline blendstock for August--the benchmark
gasoline contract--rose 83 points to $2.8684 a gallon while August
heating oil traded at $2.8810--56 points higher.
ICE gasoil for August changed hands at $888.75 a metric ton--up
$1.50 from Wednesday's settlement.
Write to Eric Yep at eric.yep@wsj.com