The price of oil drifted down on Thursday, erasing substantial gains it made earlier, despite factory output in China surging.
Benchmark US crude for settlement in September slid 16 cents to trade at $102.96 per barrel as of 0650 GMT in digital trading on the New York Mercantile Exchange.
The contract added 73 cents to trade $103.12 on Wednesday after data from the Energy Department Wednesday showed a fall in US crude stockpiles that was more than twice analysts’ projections, Bloomberg reported.
A factory output study in China indicated a rise in manufacturing in July to the highest level in 18 months, suggesting that the country’s economic propping measures were having a good impact.
September-delivery Brent crude, a key gauge for international oil, dropped 14 cents to $107.89 on the ICE Futures exchange in London.
Oil prices have maintained levels above $100 per barrel after the downing of a civilian plane over a part of eastern Ukraine taken charge by pro-Moscow separatists and Israel’s aggression in the Gaza Strip increased the likelihood of instability in the Middle East.\
According to the Wall Street Journal, analysts are of the opinion that oil traders are tracking geopolitical developments over events in Ukraine before placing their bets. EU leaders convened on Thursday to decide on tougher economic measures against Russia as investigators continue to look into whether pro-Russian rebels shot down the Malaysian airliner.
“The oil market clearly does not expect the [European Union] to impose sanctions against the Russian energy sector, meaning that the market’s response would be all the more dramatic if this turned out to be the case after all,” Commerzbank analysts told clients in a note.
US data on Wednesday indicated that oil stockpiles dropped by 7.5 million barrels by the week ended July 11. Analysts had anticipated a decline of 3 million barrels, a survey by Platts showed.
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