Oil Market Mixed Amid Weak Chinese Data

@AFP
Oil Market Mixed Amid Weak Chinese Data

London (AFP) – Oil prices diverged Monday as dealers digested news that Chinese manufacturing activity shrank in March to an eight-month low, stoking demand concerns in the world’s biggest energy consuming nation.

In late afternoon deals, Brent North Sea crude for May dipped five cents to $106.87 a barrel, from Friday’s closing level.

New York’s main contract, West Texas Intermediate (WTI) for delivery in May delivery, firmed four cents to $99.50 per barrel.

“Brent crude has fallen back … as poor Chinese PMI data continues to worry traders that demand in the world’s largest economy is going to slow over the coming months,” said analyst Joe Conlan at consultancy Inenco.

“China’s manufacturing activity shrank for a third straight month in March according to a preliminary survey released ahead of next week’s official data.

He added: “There is a feeling in the market that with the economy slowing in China, there could be a move from the Beijing government to stimulate” the nation’s economy.

HSBC said preliminary readings showed Chinese factory activity had contracted in March, adding to concerns about the world’s number two economy.

The banking giant’s flash purchasing managers index (PMI) came in at 48.1, an eight-month low and down from 48.5 in February. A final figure will be released next week.

Anything below 50 indicates contraction while a figure above points to expansion.

The index is a closely watched gauge of the health of the Asian economic powerhouse and key driver of global growth.

Adding to selling pressure was a stronger dollar that makes oil denominated in the U.S. unit more expensive for traders using rival currencies, dampening demand.

The dollar rallied last week after Federal Reserve chief Janet Yellen suggested U.S. interest rates could be hiked early next year.

AFP Photo/Karen Bleier

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