Oil futures plunge 3% after biggest 3-day rally since 1990
Investing.com - Crude oil futures retreated on Tuesday, as traders cashed out of the market to lock in gains after prices soared almost $10 a barrel over the past three sessions, the biggest three-day surge since 1990.
On the ICE Futures Exchange in London, Brent oil for October delivery slumped $1.68, or 3.1%, to trade at $52.47 a barrel during European morning hours.
Brent futures rallied to $53.09 on Monday, the strongest level since July 30, before closing at $52.27, up $4.10, or 8.19%.
Brent prices are up nearly 25%, or almost $9, over the past three sessions as traders returned to the market to close out bets on lower prices, a move known as short-covering. Prices hit six-year lows of $42.23 on August 24.
Elsewhere, crude oil for delivery in October on the New York Mercantile Exchange dropped $1.60, or 3.24%, to trade at $47.60 a barrel.
On Monday, Nymex oil prices jumped to $49.33, the most since July 30, before ending at $49.20, up $3.98, or 8.8%. New York-traded oil futures advanced 26.2%, or $9, since last Thursday. Futures sank to $37.75 on August 24, a level not seen since February 2009.
Monday's gains came amid downwardly revised estimates on U.S. output along with signals that OPEC could be willing to meet with its member states from emerging markets to develop a strategy in order to address crashing energy prices.
Crude oil prices have been under heavy selling pressure in recent months amid concerns over a growing glut in world markets.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the OPEC last year not to cut production.
Meanwhile, concerns over the health of China's slowing economy and worries that the Federal Reserve will hike rates at its next policy meeting in September also weighed.
The final Caixin/Markit manufacturing purchasing managers' index for August came in at 47.3, the lowest reading since March 2009.
Meanwhile, the official China's manufacturing purchasing managers' index inched down to 49.7 last month from 50.0 in July, the weakest level since August 2012. A reading below 50.0 indicates industry contraction.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
Investors were also looking ahead to Friday's U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.
Later in the session, the U.S. Institute of Supply Management is to report on manufacturing growth.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.
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