The price of oil dropped by nearly 3 per cent today following disappointing economic news from the world's two biggest oil-consuming nations, and US crude supplies grew much more than analysts expected.
Benchmark oil for June delivery was down USD 2.72, or 2.9 per cent, to USD 90.74 a barrel in morning trading on the New York Mercantile Exchange.
Oil fell initially after data from China showed a slowdown in manufacturing growth. An industry group in China released data Wednesday showing that manufacturing grew at a slower pace in April and export orders had been declining steadily.
"This ongoing trend of slowing Chinese economic growth will translate to some additional downward revisions in global oil demand expectations" when OPEC, the International Energy Agency and the US Energy Department issue monthly reports next week, said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, in a note to clients.
The sell-off continued as weak US economic data came in and the Energy Department said US crude inventories expanded by 6.7 million barrels last week, nearly five times the increase analysts expected.
The nation's oil production, at 7.3 million barrels per day, is the highest it's been in 20 years. Imports of foreign crude increased last week, adding to bulging supplies. Elsewhere, data pointed to weaker demand for oil.
The Institute for Supply Management's monthly report showed the manufacturing sector expanded in April for the fifth consecutive month, but at the lowest rate of the year.
The Commerce Department said construction spending fell 1.7 per cent in March compared with February, as government spending cuts impacted some projects. Still, construction activity was 4.8 per cent higher than a year ago at a seasonally adjusted USD 856.7 billion, as home building continued to increase.
Payroll processor ADP said that private employers added just 119,000 jobs last month. And March's hiring was slower than first thought. The survey shows just 131,000 jobs added, down from an initial estimate of 158,000.
