Oil prices tumble after weak US, Chinese data

1st July 2010, Comments 0 comments

Oil prices tumbled Thursday on heightened concerns about weak energy demand in the wake of poor economic data from the United States and China, the world's biggest oil consumers, traders said.

New York's main contract, light sweet crude for delivery in August, slumped 3.51 dollars to 72.12 dollars a barrel.

Brent North Sea crude for August sank 3.40 dollars to 71.61 dollars a barrel in late London trade.

"Market sentiment is nervous ... fearing slower growth in China and the US after negative economic indicators have been released lately," said Torbjorn Kjus, oil market analyst at DnB NOR Markets.

New claims for US unemployment benefits jumped more than expected last week, official data showed Thursday on the eve of the key June jobs report.

Initial claims for jobless benefits rose to a seasonally adjusted 472,000 in the week ending June 26, an increase of 13,000 from the previous week's upwardly revised level of 459,000, the Labor Department said.

The leap was sharply higher than the consensus analyst forecast of 458,000 claims.

Separate data showed that the US manufacturing sector grew for the 11th consecutive month in June, but at a slower pace than expected.

"The manufacturing sector continued to grow during June; however, the rate of growth... slowed when compared to May," said Norbert Or of the Institute of Supply Management (ISM).

The firm's manufacturing index, also known as the purchasing managers index, stood at 56.2 percent, down from 59.7 percent seen in May.

The reading -- which compiles managers' reports on everything from new orders to stock inventories -- was well below market expectations of 59 percent. A reading above 50 percent indicates an expanding manufacturing sector.

Oil prices had already fallen Thursday "amid expectations of a weaker oil demand from China, following the poor Chinese PMI figures this morning that hurt sentiment for risk appetite", said Sucden analyst Myrto Sokou.

Manufacturing activity in China slowed in June, official and independent surveys showed Thursday, suggesting that government efforts to cool the fast-growing economy are working.

The HSBC China Manufacturing PMI, or purchasing managers index, fell to 50.4 last month from 52.7 in May, the bank said. A reading above 50 means the sector is expanding, while below 50 indicates an overall decline.

A separate survey released by a government agency on Thursday showed manufacturing activity slowed to 52.1 in June from 53.9 in May.


© 2010 AFP

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