* Weak China PMI survey dents oil demand outlook
* Seasonal demand in U.S. has limited downside this week
(Repeats to additional subscribers)
By Amanda Cooper
LONDON, July 24 (Reuters) - Oil prices hovered near
four-month lows on Friday after data showed a contraction in
China's factory sector and the dollar rose against a basket of
currencies.
Activity in China's manufacturing sector shrank at the
fastest pace in 15 months in July, according to a preliminary
private purchasing managers' survey. ID:nL3N1032YR
"Concerns around the demand environment were heightened
further today by the PMI (Purchasing Managers' Index) read out
of China," said Michael McCarthy, chief market strategist at CMC
Markets in Sydney.
Brent crude LCOc1 was down 15 cents at $55.11 a barrel by
1112 GMT, having hit an intraday low of $54.80, its lowest since
early April.
Brent has lost nearly 13 percent in July, its largest
one-month fall since a near 19 percent loss in January, although
downside has been less severe this week. Prices traded in the
tightest weekly range in 11 months, as strong seasonal demand,
particularly for gasoline in the U.S. summer driving season,
helped mitigate the longer-term effect of a global supply glut.
This cushion, however, is likely to be short-lived.
"You have ... global crude runs peaking right now. The
physical market has done a bit better because European refinery
demand has been very strong. So this is as good as it gets for
crude demand, but we've had this wealth of supply come down,"
Chris Main, an oil strategist at Citi, said.
U.S. crude for September delivery CLc1 edged up 18 cents
to $48.63 a barrel, having settled on Thursday down 74 cents at
$48.45, the lowest since March 31.
Main said that, for now, the most-active U.S. crude futures
contract might see some respite from the selling that knocked it
to its lowest in four months.
"We've come down $12 in three weeks, so I don't think
people now see the prompt as necessarily the big sell. Where
there is potential is a bit further down the curve," he said.
Both benchmarks have seen losses this month, partly due to a
stronger dollar, which makes it more profitable for non-U.S.
investors to sell commodities, and partly on expectations of
greater Iranian supply following last week's deal over Tehran's
nuclear programme with world powers. ID:nL5N1034H3
WTI crude oil has lost 18 percent in July, the biggest
one-month decline since December and the second-largest monthly
loss in the last seven years.
Analysts believe that the prospect of lower oil prices could
force the world's top producers to cut spending as they face the
prospect of yet another hit to quarterly profits. ID:nL5N1023IJ