Crude Oil Trades Near $74 on Concern China’s Growth Is Slowing

June 1 (Bloomberg) -- Crude oil was little changed near $74 a barrel in New York on renewed concern over growth prospects after China, the world’s second-largest energy consumer, showed signs its expansion may moderate.

Oil erased gains of as much as 1.6 percent after the Federation of Logistics and Purchasing reported China’s Purchasing Managers’ Index fell to 53.9 from 55.7 in April. The dollar also strengthened against the euro, damping investor appetite for riskier assets such as commodities.

“After the sharp rebound from $65, a lot of selling interest in coming into the market,” said Ken Hasegawa, a commodity derivative sales manager at Newedge in Tokyo. “China’s PMI has declined. It’s very hard for the market to go higher under these circumstances.”

Crude oil for July delivery was at $73.84 a barrel, down 13 cents, in electronic trading on the New York Mercantile Exchange at 12:33 p.m. Singapore time. Earlier the contract advanced as much as $1.20 to $75.17. Futures fell 14 percent in May, the biggest monthly drop since December 2008.

Floor trading was closed yesterday for the Memorial Day holiday and electronic trades will be booked today for settlement purposes.

China’s manufacturing index fell short of a median 54.5 estimate from 18 economists surveyed by Bloomberg News. Readings above 50 indicate an expansion. A separate index, released today by HSBC Holdings Plc and Markit Economics, fell to 52.7 in May, the lowest since June 2009.

The euro extended its longest monthly decline against the dollar in 10 years on concern Europe’s efforts to reduce budget deficits will stall the region’s economic growth. The 16-nation currency slipped to $1.2263 at 12:27 p.m. in Singapore, from $1.2306 yesterday in New York.

U.S. Economy

Oil earlier rose after Federal Reserve Bank of Chicago President Charles Evans said yesterday growth in the U.S. economy, the world’s biggest, will continue.

Reports this week will probably show U.S. payrolls increased in May while factories continued to expand. Gains in manufacturing may be accompanied by a rebound among service industries, which make up about 90 percent of the economy, based on a Bloomberg News survey of economists.

“There is more of an optimistic feel toward the economy starting to creep in, particularly in the U.S.,” said Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney. “People are starting to buy up, or looking to buy, because some of these commodities are cheap. Summer drive time is always a key.”

Memorial Day

U.S. gasoline demand peaks June through August. An estimated 28 million people were expected to be taking road trips in the U.S. over the three-day Memorial Day weekend, according to AAA, the country’s biggest motoring organization. That’s up 5.8 percent from last year, the first increase since 2005.

Gasoline stockpiles declined for a third week last week to 221.6 million barrels, 5.8 percent above the five-year average level, the Energy Department said May 26.

Brent crude oil for July settlement was at $74.10 a barrel on the London-based ICE Future Europe exchange, down 55 cents, at 12:25 p.m. Singapore time. Earlier, the contract rose as much as 25 cents and lost up to 61 cents.