Oil prices drop on Chinese woes

27th July 2015, Comments 0 comments

World oil prices slid on Monday to around four-month lows, hurt by poorly received economic data from China, the world's top energy consuming nation, traders said.

A strong dollar and signs of increasing US oil production added further pressure to prices, which have already been depressed by a global oversupply of crude.

US benchmark West Texas Intermediate (WTI) for September delivery fell 63 cents to $47.51 a barrel, pulling back from a near four-month low of $47.20 struck earlier in the day.

Brent North Sea crude for September dropped $1.01 a barrel to stand at $53.61 a barrel in late London deals. It earlier struck a four-month low at $53.33.

"The strengthening of the US dollar, weak manufacturing data from China and rise in the US rig count added to the woes of a weak crude market," said EY analyst Sanjeev Gupta.

The Chinese government on Monday said profits of major industrial firms slipped 0.3 percent year-on-year in June to 588.57 billion yuan.

On Friday the preliminary reading of Caixin's Purchasing Managers' Index (PMI) -- an independent survey of China's manufacturing activity -- came in at 48.2 for July, the weakest reading since 48.1 in April 2014.

Shanghai shares meanwhile suffered their biggest one-day decline in more than eight years Monday, plummeting 8.48 percent despite government efforts to prop up the market.

In a sign of drillers ramping up production, US producers added 21 oil rigs last week, according to oil services firm Baker Hughes.

Also contributing to downward pressure on prices is the expectation the US Federal Reserve will start raising interest rates before the end of the year.

This is helping to strengthen the greenback and making oil, which is priced in dollars, more expensive to holders of weaker currencies.

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© 2015 AFP

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