Crude oil futures were weaker Tuesday, pushed lower by fresh signs of a slowing U.S. economy.
Americans trimmed their personal spending by 0.2% in June, counter to economists' expectations of an unchanged reading and after inching up a revised 0.1% in May, the Commerce Department said. The decline was the biggest since September 2009.
The lower spending came as incomes rose by 0.1%, following a 0.2% rise in May.
The consumer data followed worrisome indications from the U.S. manufacturing sector. On Monday, the Institute for Supply Management said its manufacturing purchasing managers' index fell to 50.9 in July from 55.3 in June. Economists had expected the index to show a reading of 54.6, but the level stands not far above the 50 level which indicates expanding activity. The slowdown means renewed doubts about prospects for oil demand growth.
"Demand hasn't been all that strong all year long, but prices were supported because everyone was banking on an economic recovery," said Tom Bentz, a principle at BNP Paribas Commodity Futures. "Now, we've hit a speed bump."
Light, sweet crude oil for September delivery on the New York Mercantile Exchange was 45 cents lower at $94.45 a barrel. ICE September Brent crude was 34 cents down at $116.48 a barrel.
The latest economic figures come amid signs of slowing demand in the world's largest oil consumer and expectations for rising inventories as refiners trim production. Meantime, on a global basis, Saudi Arabia, the world's biggest oil exporter, boosted output in July to 9.85 million barrels a day, the most since the early 1980s, a Saudi source said. The kingdom's rise of 350,000 barrels a day lifted OPEC's output to its highest level since November 2008, as the producers acted to cover supplies lost by the ongoing Libyan civil war.
OPEC's output rise and a 60-million-barrel release in oil inventories from consumer nations that has just begun to hit the market, is easing worries about near-term tight supplies.
Analysts surveyed by Dow Jones Newswires expect oil-inventory data due this week to crude oil stocks rose by 1 million barrels as refineries cut operations relative to capacity by 0.3 percentage point. Gasoline stocks are expected to show a modest 400,000-barrel decline, with distillates, the umbrella grouping for diesel fuel and heating oil, rising by 1.4 million barrels in the week ended July 29.
The American Petroleum Institute, a trade group, is scheduled to release its data later Tuesday, while the widely watched federal Energy Information Administration data is due out at 10:30 a.m. ET on Wednesday.
Gasoline demand has been exceptionally weak during the heart of the summer driving season. The EIA reported gasoline demand hit an 11-year low for the week ended July 22 and was 6.6% below a year ago.
Reformulated gasoline blendstocks futures were down for a fifth straight day on Tuesday, with the September contract at $3.0446 a gallon, down 0.94 cent. September heating oil futures were 0.98 cent lower at $3.0876 a gallon.