World oil prices dived on Wednesday following weak manufacturing data in China, which is the world's leading consumer of energy.
Brent North Sea crude for delivery in September sank $1.52 to stand at $106.90 a barrel in late afternoon London deals.
New York's main contract, West Texas Intermediate (WTI) for delivery in September, slumped $1.92 to $105.31 a barrel.
"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 China hit an 11-month low of 47.7 for July, down from 48.2 in June.
A reading above 50 indicates growth and anything below points to contraction. Its final reading will be released at the start of next month.
The result is the latest in a string of data suggesting previous double-digit growth rates in the world's top energy consumer are a thing of the past as Beijing looks to shift its income source from exports to domestic consumption.
On a brighter note, private business across the eurozone returned to growth in July for the first time in 18 months, a key survey indicated on Wednesday.
Markit's Eurozone Composite Purchasing Managers Index logged 50.4 points, above the 50-mark signalling growth, and a bigger-than-expected rise according to analysts after posting 48.7 points in June.
Elsewhere, investors digested the release of the weekly crude stockpiles data in top oil consumer the United States.
The US government's Energy Information Administration (EIA) revealed that American crude reserves sank 2.8 million barrels in the week to July 19.
That was greater than market expectations for a drop of 2.1 million barrels, according to analysts polled by Dow Jones Newswires. Falling US reserves signal strong demand and normally support higher price levels.
"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.
The EIA added that US gasoline or petrol stockpiles fell by 1.4 million barrels, compared to expectations of an increase of 900,000 barrels.
Distillate stocks, which includes diesel and heating oil, slid by 1.2 million barrels. Analysts had pencilled in a 1.6-million-barrel increase.