Oil prices dropped today, driven by apprehension that the oil demand outlook will be sluggish if China’s economy continues to crawl, along with the eurozone’s continued weakness and automatic spending cuts in the US.
Brent crude slipped by 30 cents to $111.08 a barrel, while US oil dropped by 26 cents to $91.79, reported Reuters.
In February, China’s official Purchasing Managers’ Index (PMI) showed 50.1, below market speculation of 50.2, as overseas demand for Chinese goods remained low. This was the lowest reading for the index since September 2012.
According to data released by the National Bureau of Statistics, new orders in China, mainly export orders, were lower in February than in January.
Prices also came under pressure because of the political deadlock between The White House and Republicans, who attempted to reach a deal to avoid $85bn in cuts across federal government agencies.
On Thursday, the International Monetary Fund (IMF) warned that if the cuts are implemented in its totality, it would cut at least 0.5% points off its 2013 US economic growth forecast of two percent.
The Energy Information Administration, in its weekly government data, said that US crude inventories increased by 1.13 million barrels last week due to an increase in imports.
Image: China’s official Purchasing Managers’ Index (PMI) was 50.1 in February. Photo courtesy of freedigitalphotos.net / bartosch.