Oil futures dropped today after a preliminary survey showed that Chinese manufacturing activity contracted for a fourth straight month in April, prompting concerns over crude oil demand.
Brent crude fell by seven cents to $107.65 a barrel, while US oil was down by seven cents to settle at $99.41, reported Reuters.
Crude prices declined after the HSBC Purchasing Managers’ Index (PMI) for April printed at 48.1, weaker than the initial or flash reading of 48.3, though still just above the March 2014 result of 48.0.
The result remained below the 50 level that divides expansion from contraction.
Oil prices were also pressured by higher Libyan exports in recent weeks. The country’s oil production currently stands at 250,000bpd, but the vital southern El Sharara oilfield remains shut.
The Institute for Supply Management data released overnight showed that growth in the US services sector accelerated in April, offering some relief from the pessimism generated by disappointing Chinese manufacturing data.
The services sector index rose to 55.2 in April from 53.1 in March, topping expectations for a read of 54.1, which added more evidence that the US economy is indeed recovering, helping to lift the prospect for crude oil demand in the US.
Further decline in crude prices was curbed after a spokesman for state-run National Oil Corp (NOC) said that a new protest has shut down the Zultun and Raquba oilfields in central-eastern Libya, halting the combined output of 39,000bpd.
Investors are awaiting the American Petroleum Institute (API) and the US Department of Energy’s Energy Information Administration (EIA) weekly data, which are scheduled to be released later today and on Wednesday respectively, to gauge oil demand.
Image: Services data adds more evidence that the US economy is indeed recovering. Photo: courtesy of freedigitalphotos.net/winnond.