Oil market slips on weak Chinese data

20th February 2014, Comments 0 comments

Global oil prices dropped on Thursday as traders reacted to shrinking manufacturing output in China, which is the world's second biggest consumer of crude after the United States.

Investors awaited the US energy stockpiles report, delayed 24 hours by Monday's holiday in the United States.

Brent North Sea crude for delivery in April slid 61 cents to $109.86 a barrel in London trading.

New York's main contract West Texas Intermediate (WTI) for March lost 16 cents to $103.15 a barrel, but held close to recent four-month highs hit on keen US winter demand for heating fuel.

"Brent has dipped back below $110, weighed on by weaker Chinese data, while WTI hovers close to $103 near a four-month high due to higher heating demand," said analyst Lucy Sidebotham at British-based energy consultancy Inenco.

"Chinese manufacturing activity figures showed the slowest growth in seven months, while employment figure fell at the fastest pace in five years. This knocked oil prices as demand fears struck for the second largest consumer."

A closely-watched index showed Thursday that China's key manufacturing sector contracted further in February.

British banking giant HSBC's preliminary reading for its purchasing managers' index (PMI) for China, which tracks manufacturing activity in factories and workshops, fell to 48.3 this month.

That marked a further tumble from the final reading of 49.5 in January, when the figure showed contraction for the first time in six months.

The index is a closely-watched gauge of the health of the world's second biggest economy. A reading above 50 indicates growth, while anything below signals contraction.

Conflict in Africa's oil-exporting countries were lending some support to prices, traders said.

Rebel forces in South Sudan on Tuesday launched a major assault against the key oil-hub of Malakal, officials said.

The leader of radical Islamist group Boko Haram, Abubakar Shekau, also threatened attacks in Nigeria's oil-rich Niger Delta region in a new video released on Wednesday.

© 2014 AFP

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