(Corrects to remove erroneous 'covering short positions' from
first paragraph)
* Prices fall nearly $2 a barrel in early trading
* World still over-supplied with oil - Morgan Stanley (NYSE:MS) report
* China manufacturing contracted at fastest pace in three
years - official PMI data
By Keith Wallis
SINGAPORE, Sept 1 (Reuters) - Oil prices fell around 3
percent in Asian trade on Tuesday, with investors taking profits
after Brent and U.S. crude soared more than 8 percent in the
previous session.
Both Brent and U.S. crude prices dropped nearly $2 a barrel
shortly after trading in Brent started on Tuesday, before partly
recovering later in the session.
"A lot of the fall was due to short-covering," said Ben Le
Brun, market analyst at Sydney's OptionsXpress.
"There could be a bit of profit-taking for people who have
gone long."
U.S. crude, also known as West Texas Intermediate, had
climbed 27.5 percent by the end of three days of gains in the
previous session, the largest three-day increase in dollar terms
since February 2011 and the biggest percentage increase over
three days since August 1990.
The surge was fuelled by an OPEC commentary saying the
cartel was willing to talk to other producers to achieve
reasonable oil prices, as well as by the downward revision of
U.S. output data by the U.S. Energy Information Administration
(EIA). ID:nL9N10A035
"(The OPEC comments) could be just a bit of politicking ...
but it does suggest that many producers are likely to be hurting
at these levels," ANZ said in a market report on Tuesday.
OPEC's indications about possible cuts could be the cartel's
way of dealing with increased Iranian crude exports once
sanctions are lifted, Phillip Futures said in a note on Tuesday.
Revised EIA data published on Monday showed U.S. domestic
oil production peaked at just above 9.6 million barrels per day
(bpd) in April before falling by more than 300,000 bpd over the
following two months. ID:nL1N1160WY
U.S. commercial crude stocks fell by 1.5 million barrels to
449.3 million barrels last week, according to a Reuters poll of
analysts on Monday taken ahead of U.S. industry and government
data. ID:nL1N1161T6
Despite the fall in U.S. production the global oil market is
still oversupplied with oil and a decline in U.S. production is
increasingly likely in 2016, Morgan Stanley said in a report on
Tuesday.
Brent crude LCOc1 for October delivery had dropped $1.50
to $52.65 a barrel, or 2.8 percent, as of 0638 GMT after
climbing $4.10, or 8.2 percent, in the previous session. It
dropped by $1.99 a barrel earlier in the session.
U.S. crude CLc1 for October delivery dropped $1.54, or 3.1
percent, to $47.66 a barrel, after it settled up $3.98, or 8.8
percent in the previous session. It earlier dropped by $1.97 a
barrel.
Investors will be watching key U.S. data, including oil
stocks, manufacturing and vehicle sales figures, later on
Tuesday to give further direction to prices.
That comes after official data from China on Tuesday showed
its manufacturing sector contracted at its fastest pace in three
years in August, reinforcing concern over the health of the
world's second-largest economy. ID:nZZN3DJD00
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For a 24-hr chart on Brent:
http://graphics.thomsonreuters.com/US/2/PVB_20150109085239.png
For a 24-hr chart on U.S. oil:
http://graphics.thomsonreuters.com/US/2/PVB_20150109084339.png
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