Oil prices fall amid weakening China manufacturing activity

PanARMENIAN.Net - The price of oil fell below $93 per barrel Thursday, May 23, after a survey showed manufacturing activity in China falling to its lowest level in seven months, a sign that the recovery in the world’s No. 2 economy is fading, The Associated Press reports.

Benchmark oil for July delivery was down $1.37 to $92.91 per barrel at late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract declined $1.90 to close at $94.28 a barrel on Wednesday.

HSBC Corp. said a preliminary version of its monthly purchasing managers’ index fell to 49.6 for May from 50.4 in April. Numbers below 50 indicate contraction. Oil prices fell because a downturn in energy-hungry China would likely lead to a decline in crude demand.

“I think the economic slowdown in Europe, the U.S. and Japan is finally hurting China,” said Francis Lun, chief economist at GE Oriental Financial Group in Hong Kong. “It confirms a pattern since the beginning of the year of a slow decline in the manufacturing sector.”

Stock markets in Asia fell sharply and Japan’s Nikkei 225 plunged more than 7 percent as a spike higher in government bond yields and the Chinese data sparked a correction that traders said was inevitable given the benchmark’s remarkable 50 percent gain this year before Thursday’s plunge.

Brent crude, a benchmark for many international oil varieties, dropped $1.25 to $101.35 a barrel on the ICE Futures exchange in London.