Oil market slips on China data
World oil prices fell Tuesday, surrendering some of the previous day's gains as data showed shrinking manufacturing activity in top energy consumer China.
US benchmark West Texas Intermediate (WTI) for October delivery lost 64 cents to $48.56 per barrel.
Brent North Sea crude for October dropped 95 cents in early afternoon London deals to $53.20.
Crude futures had surged on Monday as the US government lowered its domestic production estimate and the OPEC cartel said it was "ready to talk" to producers about prices, which had fallen last month to their lowest levels in six and a half years.
However on Tuesday, a contraction in the Purchasing Managers' Index (PMI) for China's factory sector fuelled fears about the health of the world's second biggest economy.
The PMI for China's key manufacturing sector slumped to a three-year low of 49.7 in August, an official index showed, the latest sign of slowing growth in the country which is a major engine for global economic expansion.
US financial giant Citigroup said in a market commentary that China was driving prices of commodities, including oil, "as never before, and it is driving them lower."
"We expect China to continue to exert downward pressure on commodity prices in the coming months, representing one of the three key drivers for commodity prices."
The PMI reading was worse than the 50.0 rate in July, and marked the first time it showed a contraction since February. A figure above 50 signals expansion in the sector, while anything below indicates shrinkage.
Other analysts said the global crude oversupply remains a drag on prices despite talk by the US and the Organization of the Petroleum Exporting Countries (OPEC) of possible cuts in elevated production levels.
"Firstly, talk is cheap," said Nicholas Teo, market analyst at CMC Markets in Singapore.
"Secondly, even though US production has started to fall, June production was still up 7.1 percent over a year ago," he said in a market commentary.
"In the near term, there is likely to be little or no relief on either the supply or demand fronts," said business consultancy IHS.
"In particular, the oversupply problem could take a long time to correct."
© 2015 AFP