Prices dip below US$95 a barrel after China reports slowing manufacturing pace
BANGKOK: Oil dipped below US$95 per barrel after China reported manufacturing rose at the slowest pace in over two years in June, pointing to a possible slowdown in energy demand.
Benchmark crude for August delivery dipped $1.06 to $94.38 per barrel in late Bangkok time July 1 on the New York Mercantile Exchange after rising $4.16 per barrel over the previous two days. In London, Brent crude for August delivery was down $1.43 cents to $111.05 a barrel on the ICE Futures exchange.
The China Federation of Logistics and Purchasing said its monthly purchasing managers index fell to 50.9 in June, the slowest pace in 28 months. The report said the trend likely means a further slowdown in growth brought on by inflation-fighting curbs on credit.
The price of crude eased June 30 when Greece approved final details of a plan that will bring sweeping financial reform to its beleaguered economy. That eased concerns about a spreading financial crisis in Europe, resulting in a strengthening euro against the dollar. That, in turn, gave oil a boost, since it tends to rise as the dollar falls and makes crude barrels cheaper for investors holding foreign money.
Crude has dropped from near $115 early last month amid concerns about slowing global demand.
The 28-nation International Energy Agency (IEA) remained worried enough about oil’s impact on the global recovery that it pledged last week to release 60 million barrels of crude and refined products onto the market in an effort to prevent another price spike.
Oil plunged after the announcement. The group said it should more than make up for the loss of Libya’s 1.5 million barrels of daily exports. The release is only a temporary fix, and analysts say world supplies will continue to tighten—pushing prices higher—unless IEA loosens the spigot again.