Crude prices decline despite higher US demand as markets tumble on recovery jitters

Oil pries followed the usual pattern today and moved alongside equity markets in the US and Europe, which once again were in decline following Wednesday’s selloff that was triggered by a disappointing US jobs update.
Yesterday’s data showed just 13,000 new jobs created in the private sector in June compared to an increase of 57,000 in May. An update on China’s Purchasing Managers Index, which was released today, showed a decline from 53.9 in May to 52.1 in June, suggesting growth of the manufacturing sector, albeit at a slower pace to reinforce concerns about a slowdown in China’s economic growth. Earlier this week, the Conference Board said that its index of China’s leading economic indicators rose by just 0.3% in April compared to a previous reading of 1.7%.
US manufacturing and jobless claims figures are due out later today.
The UK’s FTSE 100 lost 1% today after closing flat on Wednesday to remain well below 4,900. The Dow Jones index in the US is projected to open 0.1% lower after shedding 1% yesterday.

Crude prices have recently been moving along with global equity markets as investors have been taking clues about the outlook for oil demand from movements in share prices.

Oil got little support from bullish inventories reports that showed a larger than expected increase in US demand last week. On Tuesday, the American Petroleum Institute (API) reported a decline of 3.4 million barrels in US crude stockpiles, while Energy Information Administration (EIA) said yesterday that crude inventories shed 2 million barrels, while gasoline stockpiles added 0.5 million barrels and distillates, which include diesel and heating oil, added 2.5 million barrels.
August Brent Crude declined to US$74.05/barrel, while US light, sweet crude for August delivery slid to US$74.56/barrel on the New York Mercantile Exchange (NYMEX).
BP (LON:BP) was the best performer among the blue chip oil and gas producers with a 3% gain. BG Group (LON:BG) and Tullow Oil (LON:TLW) posted marginal gains, while Cairn Energy (LON:CNE) declined 1% and supermajor Shell (LON:RDSB) tumbled 3.2%.
Oil and gas engineering firms Amec (LON:AMEC) and Petrofac (LON:PFC) lost 1.6% and 2% respectively.
Midcaps were mixed. Dana Petroleum (LON:DNX) and Salamander Energy (LON:SMDR) were ont eh rise, climbing 5.3% and 1.1% respectively. JKX Oil & Gas (LON:JKX) was at the bottom of the pile with a 4% loss. Heritage Oil (LON:HOIL) and Soco International (LON:SIA) slipped 3.2% and 2.5% respectively, while Melrose Resources (LON:MRS) shed 1% and Dragon Oil (LON:DGO) posted a marginal loss, as did Premier Oil (LON:PMO).
Wellstream Holdings (LON:WSM) slipped 12%, while another services company Wood Group (LON:WG) added 1.2%.
Most juniors followed the trend. Western Europe operating oil and gas company Northern Petroleum (AIM: NOP) and Irish oil and gas exploration company Petroceltic International (AIM: PCI) lost 10%, while Africa and FSU operating oil and gas junior Victoria Oil & Gas (AIM: VOG) dropped 7%.

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