Oil prices slide on 'disappointing' Chinese data

1st July 2011, Comments 0 comments

World oil prices fell Friday on a sharp slowdown for manufacturing in China, which is the world's biggest consumer of energy.

Sentiment was also hit by downbeat manufacturing data in Britain and the eurozone, ahead of the latest figures from the United States, which is the top oil-consuming nation.

Brent North Sea crude for delivery in August sank $1.37 to $111.11 in early afternoon London trade.

New York's main contract, West Texas Intermediate for August, fell $1.01 to $94.41 a barrel.

"The oil market received some pressure from the disappointing Chinese PMI figures that raised renewed concerns for an upcoming slowdown in the Chinese economy," said Sucden brokers analyst Myrto Sokou.

Growth in China's manufacturing activity almost stalled in June, with the official PMI falling for the third straight month to 50.9 in June from 52.0 in May, official data showed.

Separately, the HSBC China Manufacturing PMI fell to an 11-month low 50.1 in June from 51.6 in May.

Later on Friday, traders will focus on US manufacturing data after stronger-than-expected production figures in the Chicago region on Thursday.

"It is a busy day in the US macroeconomic figures that could provide a better insight for the US economy," said Sokou.

"However, due the long holiday weekend in the US, trading conditions might be tentative." US financial markets will be closed on Monday for the Independence Day public holiday.

Oil prices have rallied for much of the week after a vote in the Greek parliament eased worries about a potential eurozone default that could slash global energy demand.

Greece's parliament on Thursday passed a tough austerity plan to avert a debt default that risked shaking the rest of Europe and the global financial system.

The passage of the measures paved the way for the release of more funds to Athens from a 110 billion-euro ($160-billion) European Union-International Monetary Fund rescue package.

The measures include tax rises and spending cuts expected to increase short-term economic hardship, which have triggered a general strike and violent street protests in the country.

Crude futures had tumbled last week when the International Energy Agency decided to tap strategic oil stocks in a bid to rein in high-flying energy prices.

The Paris-based IEA unexpectedly decided to release 60 million barrels over the course of a month, to make up for the loss of output from Libya.

The IEA, which represents 28 oil-importing nations, has called on the 12-nation Organization of Petroleum Exporting Countries (OPEC) to pump more crude and prevent high crude prices harming the global recovery.

© 2011 AFP

0 Comments To This Article