Oil prices extend losses in Asian trade
US benchmark West Texas Intermediate (WTI) for October delivery fell $1.03 to $44.38, while Brent crude for October sank $1.02 to $48.54 in afternoon trade.
WTI sank $3.79 and Brent lost $4.59 on Tuesday after China and the United States, the world’s top two crude consumers, posted weak factory activity data.
Beijing’s official Purchasing Managers Index (PMI) for the manufacturing sector slumped to a three-year low of 49.7 in August from 50.0 in July. A reading below 50 indicates contraction.
The US Institute for Supply Management PMI fell to 51.1, the lowest level so far this year, from 52.7 in July.
“With manufacturing PMI not showing results, markets turned bearish again,” said Daniel Ang, investment analyst at Phillip Futures in Singapore.
“The market has been flocking between the bulls and the bears, causing huge volatility in oil prices.”
Ang said dealers expect a further drop in oil prices after the release later Wednesday of the official US stockpiles report for the week to August 28.
Energy analysts are predicting a 900,000-barrel jump in US supplies, Bloomberg News reported. A jump in stockpiles typically signals weaker demand.
US overall crude reserves remain at lofty levels for this time of the year.
Dealers had been hoping that an uptick in US demand, coupled with a slowdown in output, could whittle down the huge global supplies that were a key reason for the collapse in prices from around $120 in June last year.