NEW YORK – The price of oil fell 1.6 per cent Tuesday to just below $100 a barrel, dented by soft Chinese manufacturing figures and expectations of another increase in U.S. crude stockpiles.
Benchmark U.S. crude for May delivery was down $1.61 to $99.97 a barrel in afternoon trading on the New York Mercantile Exchange. Brent crude, used to set prices for international varieties of oil used by many U.S. refineries, was down $1.72 to $106.04 a barrel in London.
Data showing weak manufacturing growth in China suggested oil demand growth could slow at the same time world supplies remain ample. Also, analysts say, tensions between Russia and Ukraine appeared to be easing somewhat, making it less likely that sanctions that could disrupt world oil supplies will be adopted.
The manufacturing index by the China Federation of Logistics & Purchasing ticked up to 50.3 points in March from 50.2 in February. Economists said the increase should have been a lot stronger because factories typically return to full speed in March after shutting for the extended Lunar New Year holiday, which begins in either January or February each year. The index uses a 100-point scale on which numbers above 50 indicate expansion.
“The hike was the smallest March upswing on record and suggests continued slowing in the country’s manufacturing activity,” wrote energy analyst Jim Ritterbusch in a report Tuesday.
China’s economy has slowed after a decade of red-hot expansion as the country’s leaders try to reduce reliance on trade and investment and encourage growth based on domestic spending.
Investors will later be monitoring fresh information on U.S. stockpiles of crude and refined products. Data for the week ending March 28 is expected to show a build of 1.8 million barrels in crude oil stocks and a draw of 2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
Crude stocks have risen 10 weeks in a row, adding over 32 million barrels between mid-January and March 21. The Energy Department’s Energy Information Administration report will be out on Wednesday.
In other energy futures trading in New York:
– Wholesale gasoline fell 3.6 cents to $2.882 a gallon.
– Natural gas fell 9 cents to $4.281 per 1,000 cubic feet.
– Heating oil fell 3.2 cent to $2.897 a gallon.
(TSX:ECA, TSX:IMO, TSX:SU, TSX:HSE, NYSE:BP, NYSE:COP, NYSE:XOM, NYSE:CVX, TSX:CNQ, TSX:TLM, TSX:COS.UN, TSX:CVE)
Pablo Gorondi in Budapest and Teresa Cerojano in Manila, Philippines, contributed to this report.