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Oil prices sink on drop in Chinese manufacturing

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(Globalpost/GlobalPost)

World oil prices dived on Wednesday following weak manufacturing data in China, the world's leading consumer of energy.

New York's main contract, West Texas Intermediate (WTI) for delivery in September, slumped $1.84 to close at $105.39 a barrel.

In London trade, Brent North Sea crude for delivery in September sank to $107.19 a barrel, shedding $1.23 from Tuesday's close.

"Crude oil is trading lower today, weighed down by concerns over China," said analyst Fawad Razaqzada at trading firm GFT Markets.

"However, manufacturing PMI in the eurozone rose to a two-year high, suggesting that the single-currency bloc could finally pull out of recession."

Global banking giant HSBC said its preliminary purchasing managers index (PMI) for Chinese manufacturing hit an 11-month low of 47.7 for July, down from 48.2 in June but still in contraction territory.

The news was better in the eurozone, where private business activity returned to growth in July for the first time in 18 months.

Markit's Eurozone Composite Purchasing Managers Index rose more than expected to 50.4 points, above the 50-mark signaling growth, after a 48.7 reading in June.

Elsewhere, investors digested the release of the US weekly petroleum stockpiles report.

The US Department of Energy's Energy Information Administration reported that US crude oil supplies sank by 2.8 million barrels in the week to July 19.

That was slightly more than market expectations of a drop of 2.1 million barrels, according to analysts polled by Dow Jones Newswires.

"US supplies dropped by 2.8 million barrels, over four percent below the same time last year, but the market had already drifted far lower for the majority of the day, taking its cue from Chinese numbers," said CMC Markets analyst Michael Hewson.

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http://www.globalpost.com/dispatch/news/afp/130724/oil-prices-sink-drop-chinese-manufacturing