Oil flat on mixed global picture
Crude fluctuated after reports showed manufacturing unexpectedly contracted in the US in November while rising to a seven-month high in China.
Prices were little changed as the Institute for Supply Management's factory index fell to the lowest level since July 2009, raising concern that slower growth will reduce fuel demand. Futures rallied to the most in six weeks earlier on the Chinese report.
"Crude is very susceptible to these intraday numbers," said Rich Ilczyszyn, chief market strategist and founder of Iitrader.com in Chicago. "It's still a bear market in terms of demand." Oil for January delivery slipped 6 cents to $88.85 a barrel at 1:44 p.m. on the New York Mercantile Exchange after climbing to $90.33, the highest intraday level since October 22. Prices gained 3.1 per cent last month and are down 10 per cent in 2012.
Brent for January settlement slid 53 cents, or 0.5 per cent, to $110.70 a barrel on the London-based ICE Futures Europe exchange.
The ISM index decreased to 49.5 last month from 51.7 in October, the Tempe, Arizona-based ISM said. Economists projected the index would ease to 51.4, according to the median forecast in a Bloomberg survey. A reading of 50 marks the dividing line between expansion and contraction.
The US, the world's biggest oil-consuming country, used 18.8 million barrels a day in 2011, or 21 per cent of the global total, according to BP's Statistical Review of World Energy.
Oil is likely to fall through the end of the year before possible gains next year, according to Morgan Stanley.
"Softer fundamentals in the fourth quarter of 2012 should weaken crude prices into year-end," the bank said in a research report today. "However, we believe risks are skewed to the upside for 2013." Total fuel demand fell 2.4 per cent in the week ended November 23 to 19 million barrels a day, the Energy Department reported last week. Gasoline consumption slumped 5.3 per cent to 8.43 million barrels a day.
US crude production climbed 1.6 per cent in the same period to 6.82 million barrels a day, the highest level since February 1994.
"I am an oil bear once you look at demand-supply fundamentals," said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors.