LONDON, (Reuters) – Brent crude fell below $108 a barrel on Thursday after data showed China’s manufacturing is still contracting, albeit at a slower pace, putting further pressure on an oil market that was weakening due to Saudi Arabia’s pledge to cool oil prices.
The China data comes a day after the Ministry of Commerce said the export outlook in the world’s No. 2 oil consumer was poor and demand would remain weak in the next few months.
“If China hits a wall, and Europe falls out from under us, then we’re going to be falling back into a recession, and that could be worse than the Great Depression,” said Tony Nunan, an oil risk manager at Mitsubishi Corp in Tokyo.
Adding to the bearishness was Saudi Arabia’s pledge to keep prices from rising too high.
Saudi oil minister Ali-al Naimi last week said the world’s top oil exporter was ready to take action to calm rising prices, which he said were not supported by market fundamentals.
Brent crude slipped 77 cents to $107.42 a barrel by 0914 GMT, its fourth day of losses. The North Sea global benchmark has lost nearly 8 percent this week and is on track for the biggest weekly fall since early June.
U.S. October crude, which expires later on Thursday, was down 79 cents at $91.19 a barrel.
The HSBC Flash China manufacturing purchasing index (PMI) for September was 47.8, well below the 50-mark that separates contraction from expansion, although a shade higher than the nine-month low of 47.6 reached in August.
Analysts said the Chinese data might be a sign that the slowdown in manufacturing is coming to an end, which in turn may limit expectations of stimulus action from the authorities and weigh on the country’s demand for commodities.
Also in the United States, crude stockpiles jumped 8.5 million barrels last week, far more than the 1 million barrels forecast in a Reuters poll of analysts, according to data from the Energy Information Administration.
U.S. imports of crude increased by 1.28 million barrels per day to 9.81 million barrels per day. Net crude oil imports hit their highest weekly level since January.