Oil down below $115 as demand worries weigh
By Claire Milhench
LONDON (Reuters) - Oil prices fell below $115 per barrel on Tuesday as renewed fears about demand destruction outweighed hopes of further stimulus measures from central banks in the United States and Europe.
Front-month Brent crude futures were down $1 to $114.78 a barrel by 10:13 a.m. EDT (1413 GMT). U.S. crude futures were down 89 cents to $95.58 a barrel from Friday's settlement. U.S. markets were shut on Monday for the Labor Day holiday.
The market had opened in a bullish mood, but conflicting signals from Europe's bankers over potential stimulus measures, and weak U.S. manufacturing data triggered a shift in sentiment as U.S. traders arrived at their desks.
Investors had been pinning their hopes on fresh stimulus measures by the European Central Bank on Thursday, but leading German bankers have clashed over the scope of the ECB's powers, potentially throwing a spanner into the works.
Traders also dumped oil futures after Markit's PMI data showing sluggish growth in U.S. manufacturing in August. Exports declined for a third straight month and firms were slow to add new workers.
The Institute for Supply Management's index of U.S. factory activity also fell to 49.6 in August from 49.8 in July, the third month of contraction in a row.
"You need to see demand coming through," said Michael Hewson, a markets analyst at CMC Markets in London. "And the only way you are going to get demand growth is if oil prices fall. Any upside in oil is going to be limited."
Traders said that oil prices also seemed to be following the euro down, which crashed to a session low against the dollar. "We're selling off but there is not a lot of volume going through," said Rob Montefusco at Sucden Financial in London. Continued...