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Sept. 1 (Bloomberg) -- Crude declined for the first time in eight days in London before reports that may show the U.S. economic recovering is losing strength, damping demand for fuel.
Futures reversed earlier gains, falling as much as 1.1 percent, as Europe’s sovereign debt crisis caused the dollar to strengthen, undermining the appeal of dollar-priced assets such as crude. U.S. reports may say manufacturing shrank in August for the first time in two years while employment growth slowed. China’s Purchasing Managers’ Index rose in August from a 29- month low, according to data published today.
“The economic soft patch looks as if it will last longer than we had thought, but I am not convinced it will end in recession,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark, who predicts Brent will average $107 in the fourth quarter.
Brent crude for October settlement fell as much as $1.24 a barrel and was at $114.15 at 1:36 p.m. on the ICE Futures Europe exchange in London, snapping its longest winning streak since April. It was earlier surged to $115.27, the highest since Aug. 3. The European benchmark contract was at a premium of $25.71 to U.S. futures, compared with a record close of $26.21 on Aug. 19.
Oil for October delivery on the New York Mercantile Exchange was down 37 cents at $88.44 a barrel after falling as much as 60 cents to $88.21 a barrel. Futures fell 7.2 percent in August, their biggest monthly loss since May, and are down 3.2 percent this year.
U.S. Manufacturing Slows
The U.S. Institute for Supply Management’s manufacturing index fell to 48.5 last month from 50.9 in July, according to the median estimate of 80 economists surveyed by Bloomberg News before today’s data. The dividing line between expansion and contraction is 50, a level that the gauge last fell below in July 2009.
Tomorrow’s Labor Department report may show growth in nonfarm payrolls slowed to 70,000 from 117,000. ADP Employer Services said yesterday that U.S. companies added 91,000 workers to payrolls in August, the fewest in three months, according to data from ADP Employer Services.
China’s PMI rose to 50.9 last month from a 29-month low of 50.7 in July, the China Federation of Logistics and Purchasing said today. A separate index by HSBC Holdings Plc and Markit Economics was 49.9, compared with 49.3 the prior month. A reading of 50 is the borderline between expansion and contraction.
Gulf Storm System
A system of clouds and thunderstorms over the southeastern Gulf of Mexico has a 60 percent chance of becoming a tropical cyclone in the next two days, the National Hurricane Center said in an outlook last night.
“Interests along the entire northern Gulf of Mexico coast should monitor the progress of this disturbance,” the NHC said.
BP Plc began yesterday removing more than 500 non-essential workers from some platforms in the Southern Green Canyon area, according to a message on the company’s hurricane hot line. The London-based company said it is preparing for a potential shut- in and full evacuation if necessary.
Anadarko Petroleum Corp. evacuated non-essential workers from its Gunnison, Nansen and Boomvang platforms in the western Gulf, according to a notice on the Woodlands, Texas-based company’s website.
Katia, the second hurricane of the Atlantic season, may grow into a major storm this weekend north and east of Puerto Rico, the U.S. National Hurricane Center said. The storm was about 1,000 miles (1,620 kilometers) east of St. Lucia in the Caribbean with maximum winds near 75 miles per hour, the NHC said in an advisory at 5 a.m. New York time. Katia was moving west at 20 mph, the Miami-based center said.
--Editors: John Buckley, Raj Rajendran
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