Oil prices fell sharply on Tuesday after official data showed China’s manufacturing sector, one of the main engines powering the world’s biggest energy consumer, contracted at its fastest pace in three years.
China’s official Purchasing Managers’ Index (PMI) dropped to 49.7 in August from 50.0 in July, reinforcing concerns over the world’s second-largest economy.
The figures helped spur a retreat in oil prices after three days of hefty gains. Investors took profits after Brent and U.S. crude both soared more than 8 percent on Monday, traders said.
“It was primarily the China fear factor,” Carsten Fritsch at Commerzbank in Frankfurt told the Reuters Global Oil Forum.
Benchmark Brent crude LCOc1 dropped $2.53 to a low of $51.62 a barrel. It was trading around $51.90 by 1330 GMT. On Monday, Brent climbed $4.10, or 8.2 percent, extending a rally from a 6-1/2-year low at just above $42 on Aug. 26.