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Oil prices drop on weak Chinese data

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(Globalpost/GlobalPost)

World oil prices slid Wednesday on weak Chinese and US economic data and ahead of the latest weekly snapshot of energy inventories in the United States.

Brent North Sea crude for delivery in June fell 80 cents to stand at $101.57 a barrel in London midday deals.

New York's main contract, West Texas Intermediate (WTI) for June shed 75 cents to $92.71 a barrel.

"Crude oil prices retreated... on Wednesday with Brent sliding lower below $101 per barrel, as disappointing Chinese PMI manufacturing data weighed on market sentiment," said Myrto Sokou, senior research analyst at Sucden brokers.

Manufacturing activity in China slowed slightly in April from the previous month, official data showed, in a sign of further weakness in the world's second-biggest economy.

The purchasing managers' index (PMI) dropped to 50.6 in April, down from 50.9 the month before, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing (CFLP).

The PMI is a widely watched indicator of the health of the Chinese economy, with a reading above 50 indicating expansion while anything below that points to contraction.

Oil prices had meanwhile slumped on Tuesday after an index on US manufacturing activity in the Chicago area unexpectedly dived into contraction territory in April.

Markets were awaiting the release Wednesday of US energy stockpiles data, as well as the outcome of key central bank policy meetings this week, with expectations that stimulus will keep flowing in a bid to prop up economic growth.

The US Federal Reserve's policy-setting Federal Open Market Committee (FOMC) will wrap up a two-day meeting Wednesday. It is widely expected to maintain its ultra-low interest rates and $85 billion-a-month bond purchasing programme.

The European Central Bank will unveil its latest interest rate decision Thursday. Most analysts predicted the ECB will cut its key interest rate, which is already at an all-time low of 0.75 percent.

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http://www.globalpost.com/dispatch/news/afp/130501/oil-prices-drop-weak-chinese-data