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Oil prices decline in Asia on weak China manufacturing
[SINGAPORE] Oil prices fell 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.
The retreat snapped 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 per cent 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 0.19 cents at US$46.40 and Brent crude for December was trading three cents lower at US$49.53 a barrel at around 0250 GMT.
"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 per cent 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.