Oil prices drop on weak China manufacturing data

Oil barrel.

Oil barrel.

World oil prices slid Monday on data showing that the key manufacturing sector in China, the world’s top energy consumer, shrank in October for the third straight month.

Brent North Sea crude for delivery in December lost 84 cents to stand at $48.72 a barrel in London midday deals.

US benchmark West Texas Intermediate for December shed 76 cents to $45.83 a barrel compared with Friday’s close.

Activity in China’s vast manufacturing sector shrank in October for the third straight month, officials said Sunday, fuelling fears that growth in the world’s second largest economy is slowing faster than policymakers admit.

The Purchasing Managers’ Index (PMI), tracking activity in the factory and workshop sector, was unchanged from the previous month at 49.8, the state statistics office said.

A PMI figure above 50 signals expanding activity while anything below indicates shrinkage.

“China’s manufacturing PMI reading for October released over the weekend offered little encouragement for investors who had hoped that activity in the world’s second largest economy had finally bottomed out and reached a floor,” said Kash Kamal, senior research analyst at broker Sucden.

Oil prices had last week won support following a decline in US crude production which boosted hopes it could help ease a global oversupply that has depressed crude futures for more than a year.

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