Oil slips, weak data weighs

London: Oil fell on Friday as weak European data reinforced a gloomy picture for the demand outlook.

Eurozone manufacturing shrank for the 15th month running in October as output and new orders fell, a survey showed, reinforcing a view that demand for fuel in developed economies will likely remain subdued.

Weak economic growth, high prices and improving vehicle fuel efficiency pushed down consumption of gasoline and diesel in most of Western Europe over the summer, official statistics showed.

Brent crude for December was down 31 cents to $107.86 a barrel by 0943 GMT, while US crude for December was down 80 cents at $86.29.

Traders were awaiting the closely watched US non-farm payrolls data expected at 1230 GMT.

“It looks like the market is on the defensive side before the non-farm payrolls, there are not high hopes for it and there’s a sense that growth and recovery in the US will be slow,” said Bjarne Schieldrop, analyst at SEB in Oslo.

Economic data was not all negative, however. Factory activity in Asia’s large economies started to pick up in October after a year of slower growth, surveys showed on Thursday, while US manufacturing showed modest improvement.

Front-month Brent is set to close lower for the fifth consecutive session and for the third straight week as supply concerns in the Middle East and the North Sea eased.

The North Sea Buzzard oilfield was expected to restart on Thursday, adding supplies to the most important of the North Sea crudes that underpin the Brent oil benchmark.

Brent’s premium to West Texas Intermediate crude has narrowed to about $21 a barrel.

Supply from West Africa remained a concern however, after US oil major Chevron said that its Angolan subsidiary Cabinda Gulf Oil Company had declared force majeure at the Kuito offshore oil terminal on October. 29.

Last month, Shell declared a force majeure on Bonny Light and Forcados grades of Nigerian oil due to fire, flooding and theft.

The US East Coast is still struggling to recover from super storm Sandy. Logistical problems continued to roil New York harbour on Thursday, threatening widespread delays in fuel deliveries off the New York Mercantile Exchange’s futures contracts.

Crude inventories fell unexpectedly last week as imports dropped sharply, while oil product inventories were mixed as refinery utilisation rose, the US Energy Information Administration reported on Thursday.

Crude stocks dropped by 2.05 million barrels in the week to October. 26, the government figures showed. That compared with analyst forecasts in a Reuters poll for a rise of 1.5 million barrels.

US stocks of refined products were mixed as refinery utilization rose by 0.5 percentage point to 87.7 per cent of capacity. However, they remained relatively low keeping upward pressure on refining margins.

“The narrative of ample crude stocks and low refined product inventories remains intact despite the latest weekly changes to inventories,” BNP analysts said in a note.

“We remain concerned that the existing low level of distillate stocks is set to continue into the winter.”