Current Oil Price Drops on Weak Chinese Manufacturing Data

The current oil price dropped after a slowdown in the manufacturing of China added to the subdued demand outlook.

West Texas Intermediate (WTI), the U.S. benchmark crude for delivery in June was 60 cents lower to a crude price per barrel of $88.59 in the NYMEX. May’s expired contract gained 75 cents to end at $88.76 per barrel during the previous trading day.

The initial version of China’s monthly Purchasing Managers’ Index (PMI) fell lower than expected to 50.5 in April compared to 51.6 of March. Readings higher than 50 signifies expansion.

Ric Spooner of Sydney’s CMC Markets said that it is another piece in the puzzle that brings additional detail to the possible condition of China’s weakening growth, particularly in the manufacturing industry. Moreover, he said that this is possibly pulling markets slightly lower at present.

In the past week, the government of China said that the growth of its economy in the first quarter unexpectedly fell from 7.9 percent of the previous quarter to only 7.7 percent.

Any falling trends in the economy of China can lead the price of crude to decline since the nation is the largest importer of oil worldwide.

On London’s ICE Futures Exchange, Brent for delivery in June was 66 cents lower to $99.73 per barrel.

In other NYMEX trading, the price of wholesale gasoline moved 0.8 cent lower to $2.753 a gallon. Natural gas dropped 2 cents to cost $4.247 per thousand cubic feet. And heating oil shed a cent to a price of $2.785 per gallon.

By: Chris Termeer