Oil prices dip as concerns intensify about global economy on weak data from China

04-Sep-12

Oil prices started the week on a damp note on release of weaker-than-expected manufacturing data from China intensified concerns about the global economy. Benchmark oil for October delivery dipped to US$96.3 in Asia in electronic trading on the New York Mercantile Exchange. Brent crude for October delivery dipped to US$114.3 on the ICE Futures exchange in London. State-authorized China Federation of Logistics and Purchasing said its purchasing managers' index, a measure of manufacturing activity, fell to 49.2 in August from July's 50.1. Numbers below 50 indicate activity is contracting. That was a nine-month low, according to analysts at Bank of America Merrill Lynch, who said in a market commentary that investors need to be prepared for worsening data about Chinese inflation, industrial production, retail sales and trade. Weak economic growth tends to lead to lower fuel consumption and energy prices often fall as a result.