Oil prices were subdued in Asia Monday on data showing that the key manufacturing sector in China, the world's top energy consumer, shrank in October for the third straight month.
Prices were up for three days of straight gains last week following a decline in US crude production which boosted hopes it could help ease a global oversupply that has depressed oil prices for more than a year.
Data from the US Department of Energy showed oil production down 45,000 barrels per day in August from the July level at 9.3 million barrels per day. The Baker Hughes rig count for oil, a closely-watched benchmark of US drilling activity, fell by 16 rigs to 578, down 64 percent from the year-ago level for the week ending October 30.
In Asian trade Monday, US benchmark West Texas Intermediate for delivery in December was down 21 cents at $46.38, while Brent crude for December was more volatile trading two cents higher at $49.58 a barrel at around 0700 GMT after swinging between positive and negative territory.
"Economic data released (Sunday) revealed the unexpected contraction of China's manufacturing sector in October for a third straight month, as well as signs of cooling of its services sector," said Sanjeev Gupta, head of the Asia Pacific oil and gas practice at professional services firm EY.
"This may negatively impact sentiments of an already weak oil market and restrict any major gains in the coming weeks," he told AFP.
Activity in China's vast manufacturing sector shrank in October for the third straight month, officials said Sunday, fuelling fears that growth in the world's second largest economy is slowing faster than policymakers admit.
The Purchasing Managers' Index (PMI), tracking activity in the factory and workshop sector, was unchanged from the previous month at 49.8, the state statistics office said.
A PMI figure above 50 signals expanding activity while anything below indicates shrinkage.
China's economy grew at 6.9 percent between July and September this year, according to official figures, the slowest pace since the aftermath of the global financial crisis in 2009.
Many analysts, however, believe China's actual growth is significantly lower, pointing to weakness in trade data and to alternative indicators such as the PMI.
Oil prices down on Russian production gains
New York (UPI) Nov 2, 2015 –
An increase in Russian crude oil production and more signs of weakness in the Chinese economy pushed crude oil prices down on the first trading day in November.
The price for Brent crude oil was down about 1.3 percent from the previous session to $48.88 per barrel in early morning trading. West Texas Intermediate, the benchmark price for U.S crude oil, was down 1.5 percent to $45.85 per barrel.
Crude oil prices are moving steadily lower, off about 11 percent for the year, because of signs of lingering global economic weakness and a surplus in supplies.
Novatek, the largest private crude oil producer in Russia, reported a 40 percent increase in production year-on-year. Among those reporting a decline, Rosneft, one of the largest companies in Russian in terms of overall output, reported a 1.1 percent decline in production for October, when weighed against last year.
Russia's momentum in production mirrors the energy companies who've reported earnings so far in the third quarter. Most companies, despite the downturn sparked by the market tilt toward the supply side, have reported an increase in overall crude oil production this year.
In terms of broader economics, China continued with a long string of reports showing emerging weakness with a drop in the manufacturing purchasing managers' index, or PMI. A reading of 49.8 in October signals factory activity in the economy is in contraction.
The Shanghai Composite Index closed down 1.7 percent for Monday, with oil majors China Petroleum and Chemical Corp. and PetroChina Ltd. among those reporting heavy losses.
