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Oil dives on Fed taper signal, weak China data

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(Globalpost/GlobalPost)

Oil prices took their steepest fall in seven months Thursday, pushed down by a Federal Reserve signal of the winding down of stimulus and weak Chinese manufacturing data.

New York's main contract, West Texas Intermediate light sweet crude for July, closed at $95.40 a barrel, down $2.84 from Wednesday.

The 2.9 percent drop was the largest since November 7, the eve of the US presidential election.

In London trade, the European benchmark Brent North Sea crude for delivery in August also dived the most since November 7, by $3.97 to $102.15 a barrel.

The oil market joined a global sell-off in stocks and gold in response to Fed Chairman Ben Bernanke's comments that the Fed could begin to wind down its $85 billion-a-month bond purchases if the economy continues to improve.

"We are having a bloodbath here," said Matt Smith of Schneider Electric.

Smith said the market was digesting the Fed news when another blow hit: HSBC's preliminary reading showing another contraction in Chinese manufacturing activity, slumping in June to a nine-month low.

The poor manufacturing number out of China -- the economy driving global growth -- "really just greased the floor for a slide lower," he said.

"Everything is being sold. It is just one of those days of risk aversion."

The drop in oil prices erased last week's gains that were fueled by fears the Syrian civil war could escalate and push the crude-rich Middle East into a wider conflict.

"The concerns about Syria are still there, but at the moment people are selling and preferring to hold on to their cash," Kelly Teoh, market strategist at IG Markets in Singapore, told AFP.

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http://www.globalpost.com/dispatch/news/afp/130621/oil-dives-fed-taper-signal-weak-china-data