* China PMI comes in below expectations at 50.1 for July
* Investors eye Fed policy decision, ECB meeting
* Coming Up: U.S. EIA weekly stocks report; 1430 GMT
By Luke Pachymuthu
SINGAPORE, Aug 1 (Reuters) – Brent crude slipped toward $104
per barrel on Wednesday after softer manufacturing data from top
energy consumer China chipped away at a fragile market
sentiment, while fading hopes for U.S. monetary stimulus
measures also weighed on prices.
China’s official factory purchasing managers’ index dropped
to an eight-month low and fell short of expectations, reviving
concerns the world’s second-biggest economy was losing steam,
along with other major Asian exporters Japan, South Korea and
Taiwan who reported worsening economic stress on Tuesday.
Brent crude fell 15 cents to $104.77 a barrel by
0312 GMT, after hitting a near one-week low of $104.06 earlier.
U.S. crude dipped 18 cents to $87.88 per barrel.
Investors are expected to mostly stay on the sidelines as
they wait for the outcome of the U.S. Federal Reserve’s two-day
policy meeting that started on Tuesday and the European Central
Bank’s meeting on Thursday.
“We may see the market lighten its hold with the China PMI
coming in below expectations, but it’s not the end of the world,
at least this week because, the main focus is still the FOMC and
ECB meeting,” said Ben Taylor, sales trader at CMC Markets.
Slowing growth in the United States, the world’s top oil
consumer, had fired up hopes of stimulus measures from the
Federal Reserve late last week, but the chances of this seem
lower now after recent supportive data, including higher home
prices and improved consumer confidence.
“I’m not expecting much to come out of the Federal Reserve
meeting, they will be waiting to see what the ECB does before
announcing any new policy action.”
“The U.S. economy is getting better, it may not be as
quickly as everyone would like but it’s growing.”
The ECB meeting on Thursday remains a key focal point for
the market which will be looking for detailed policy action to
stem rising Spanish and Italian bond yields.
“The ECB is in a tight spot now, where they have no choice
but to act to revive the economy, lower interest rates just
doesn’t seem to be working.”
Germany’s finance ministry on Tuesday reiterated its view
that there is no need to grant a banking license to the euro
zone’s new bailout fund. Such a move could enable the fund to
buy large amounts of debt issued by troubled euro zone
economies.
U.S. OIL INVENTORIES
U.S. crude oil inventories fell 11.6 million barrels in the
week ended July 27, a far bigger drop than expected, as imports
fell nearly 800,000 barrels per day (bpd), according to the
American Petroleum Institute report on Tuesday.
The U.S. Energy Information Administration’s weekly report
follows at 10:30 a.m. EDT (1430 GMT) on Wednesday.
Oil prices continue to draw support from tensions between
the West and Iran over the Islamic republic’s nuclear ambitions
and the escalating conflict in Syria.
President Barack Obama announced new U.S. sanctions against
foreign banks that help Iran sell its oil on Tuesday, hoping to
add pressure on Tehran a day before congressional votes on new
sanctions.
(Editing by Himani Sarkar)
