Crude-oil prices dropped in early Asia trade on Monday as lackluster Chinese factory activity data widened fears that demand from the world’s second-largest economy is likely to stay low.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in December traded at $46.39 a barrel, down $0.20 in the Globex electronic session. December Brent crude on London’s ICE Futures exchange fell $0.03 to $49.53 a barrel.
Earlier Monday, the Caixin China manufacturing purchasing managers’ index, a gauge of nationwide manufacturing activity, rose to 48.3 in October from 47.2 in September. The reading suggests the shrinkage in factory activity may be slowing, although it marked the eighth straight month of contraction. The official gauge of China’s factory activity, released Sunday, was unchanged at 49.8 in October. A reading above 50 indicates expansion in activity while one below that mark signals contraction.
China’s declining consumption of oil has been a major worry for the global energy sector. Plagued by oversupply and softening demand, oil prices have nearly halved from the same period a year earlier. With the expected resumption of Iranian oil exports in the coming months, analysts and industry leaders are bracing for a “lower for longer” scenario.
Even the news of a lower oil rig count in the U.S. last week–a decline of 16 to 578–failed to sustained the rally from last week.