Oil Prices Slip As China Activity Softens

U.S. futures for crude oil started the second half of the year on a down note Monday, falling at the prospects for energy were weighed by lackluster data from China, the world’s second-largest economy.

Crude for August delivery  fell 16 cents, or 0.2%, to $96.39 a barrel in electronic trade, holding lower after two separate surveys showed further slowing in Chinese manufacturing activity in June.

The report from the Chinese government showed the manufacturing Purchasing Managers’ Index (PMI) dropped to 50.1 from 50.8 in May. A separate survey from HSBC showed its own monthly PMI declining to 48.2 in June from 49.2 in May.

A reading below 50 shows a deterioration in activity, while one above signals an improvement.

“Anecdotal evidence suggested that reduced client demand, particularly from Europe and the U.S., led to fewer new export orders,” HSBC said in a statement on the PMI data.

Indications of economic slowing in China and in other countries worldwide, along with high inventory levels of U.S. crude stockpiles, hurt oil prices during the second quarter, resulting in a decline of 0.7%.

Energy investors were due to get updates on manufacturing activity from the euro zone and the U.S. later Monday. But the most anticipated report of the coming week — U.S. jobs figures for June — was due Friday.

Ahead of the reports, August futures for Brent crude   fell 15 cents, or 0.2%, to $102.01 a barrel. Brent futures on Friday wrapped up June with a gain of 2% but declined more than 6% on the quarter.

Natural gas for September delivery  rose 3 cents, or 0.9%, to $3.59 per million British thermal units.

August heating oil  held steady at $2.86 a gallon, while August gasoline  fell 1 cent, or 0.3%, to $2.71 a gallon.

Source : Marketwatch