Oil Prices Slide on Oversupply Concerns

Oil prices fell on Tuesday on worries over a global glut, while surveys showing a contraction in manufacturing activity in China and Japan also dragged on market sentiment.  An expected drawdown in U.S. crude stocks, however, put a floor under prices.

Brent crude was down 22 cents at $63.12 a barrel as of 0500 GMT (0100 EDT), after closing the previous session up 32 cents.  U.S. crude for August delivery fell 38 cents to $60 a barrel. The July contract, which expired on Monday, closed up 7 cents at $59.68 a barrel.

“I think the Japan and China PMI figures are weighing on the market,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance. China and Japan are Asia’s two biggest oil importers.  The HSBC/Markit Flash China Manufacturing Purchasing Managers’ Index (PMI) edged up to 49.6 in June, a three-month high, from 49.2 in May, but remained below the 50 mark, which separates contraction from expansion.