Oil prices dropped by over 3% on Tuesday following a slump in manufacturing activity in China.

Benchmark Brent crude slumped $2.13 to a low of $52.02 a barrel, while US crude fell by $2 to $47.20 a barrel, Reuters reported.

In August, the official Purchasing Managers’ Index of China, the world’s biggest energy consumer, dropped to 49.7 from 50.0 in July, driving down oil prices with fear of contraction in oil demand.

Analysts said that the decline in manufacturing activity may be due to temporary factory closures, aimed at controlling pollution around the country’s capital.

The weakness in China’s economy also helped prices, which have been witnessing strong gains in last three days.

Data released by the Energy Information Administration (EIA) highlighting lower-than-expected US oil production led to a rally in oil prices.

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On Monday, EIA published revised data, which showed that the US domestic oil output peaked at just over 9.6 million barrels per day (bpd) in April.

The US market is still witnessing a supply glut, despite lower production.

Organization of the Petroleum Exporting Countries (OPEC) oil producers are still pumping between two million and three million bpd, which is more than required.

Investors are keenly awaiting the US data, which is set to be released on Tuesday and includes oil stocks, manufacturing and vehicle sales figures.