Oil prices extended losses early on Wednesday as worries of slowing demand from top oil importer China after the release of weaker-than-expected economic data outweighed some positive progress on the U.S. debt ceiling bill.
Brent crude futures for August delivery slipped 15 cents to $73.56 a barrel by 0656 GMT, while U.S. West Texas Intermediate crude (WTI) fell 14 cents to $69.32 a barrel, with earlier gains reversed after China manufacturing data was released. Both benchmarks fell by more than 4% on Tuesday.
Brent’s July contract , which expires on Wednesday, and the U.S. benchmark were on track for monthly declines of more than 7% and 9%, respectively.
China’s manufacturing activity contracted faster than expected in May on weakening demand, with the official manufacturing purchasing managers’ index (PMI) down to 48.8 from 49.2 in April. The outcome lagged a forecast of 49.4.
“With China’s industrial output and fixed-asset investment growing more slowly than expected last month, markets are worried that China’s commodity demand is weakening more quickly than anticipated,” said Vivek Dhar, director of commodities research at Commonwealth Bank of Australia.