Oil dips, but floats near highs on U.S., Chinese data

Reuters with

Crude dipped on Thursday, but held near multi-week highs, supported by better-than-expected data on China's manufacturing industry and a large draw in U.S. crude oil stocks.

China's factory sector turned in its best performance in five months in May, a preliminary HSBC survey showed, suggesting a brighter outlook for demand in the world's No.2 oil consumer. Oil held its bias after U.S. jobless claims rose by more than economists had expected.

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A day after oil closed at multi-month highs, traders booked some profit. Brent crude fell 20 cents to near $110, after reaching a new 2-1/2 month high early in the session just shy of $111. U.S. crude fell 33 cents to settle at $103.74 a barrel.

Commodities such as oil were supported by minutes of the U.S. Federal Reserve's last meeting that reassured investors that policy makers would continue to support the U.S. economy. Oil prices also drew support from data showing a plunge in U.S. crude stocks last week as imports slumped to their lowest since 1997 as domestic production rose.

Crude oil inventories down 7.2 million barrels

Crude inventories in the world's biggest oil consumer fell 7.2 million barrels last week, the Energy Information Administration (EIA) said, compared with analysts' expectations for an increase of 750,000 barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell 225,000 barrels, EIA said.

Conflict in Libya also underpinned oil prices. Oil output in the OPEC-member was around 230,000 bpd, well below the country's 1.6 million bpd capacity.

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