offshore

Oil prices fell today as private survey data showed a drop in China’s factory activity, sparking worries about the pace of global growth and oil demand in the world’s second biggest oil consuming country.

Brent crude dropped by 62 cents to $109.85 a barrel, while US oil was down by 19 cents to $103.12, reported Reuters.

Crude prices slipped after China’s flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to a seven-month low of 48.3 in February from January’s final reading of 49.5.

Geopolitical risks and concerns of tighter global supply in Africa and Venezuela partially offset the negative impact on crude from China’s preliminary private survey data.

Investors are closely monitoring protests in Venezuela, where five people have died so far, following the arrest of Harvard-educated economist Leopoldo Lopez who led demonstrations against the president.

Supply is still disrupted in Africa as domestic conflicts in Libya and South Sudan have cut their crude output.

South Sudanese rebels announced that they have seized control of the capital of a major oil producing state.

"Supply is still disrupted in Africa as domestic conflicts in Libya and South Sudan have cut their crude output."

The market is also watching the progress of Iran’s nuclear talks, where six world powers worked through a second day of talks in Vienna on Tehran’s contested nuclear programme, seeking to close a vast gap in expectations about what a final agreement should look like.

Crude prices are set to weigh further as the American Petroleum Institute’s weekly inventory data showed a drop in distillates stocks, including heating oil.

The data also showed Cushing inventory fell by 1.8 million barrels.

Investors are waiting for the Energy Information Administration’s report, which is due for release later today.


Image: China’s manufacturing activity slipped again in February to its lowest in seven months. Photo: courtesy of Poulsen.

Energy