By Alexander Kwiatkowski June 1 (Bloomberg) -- Crude oil fell for a second session in New York on renewed concern about growth prospects in China, the world’s second-largest energy consumer. Oil erased a 1.6 percent gain after the Federation of Logistics and Purchasing reported China’s Purchasing Managers’ Index fell to 53.9 in May from 55.7 in April. Global stock markets dropped and the dollar strengthened against the euro, damping investor demand for riskier assets such as commodities. “The expectation that further tightening of monetary policy in China is ahead, and more visible risks in the real estate sector are leading to strong losses on the equity markets,” said Eugen Weinberg, head of commodity research with Commerzbank AG in Frankfurt. “That is translating to a stronger dollar, higher risk aversion and losses in the oil market.” Crude oil for July delivery fell as much as $2.33, or 3.2 percent, to $71.64 a barrel in electronic trading on the New York Mercantile Exchange. It was at $72.15 at 12:52 p.m. London time. Earlier, the contract advanced as much as $1.20 to $75.17. Futures fell 14 percent in May, the biggest monthly drop since December 2008. Floor trading on Nymex was closed yesterday for the Memorial Day holiday and yesterday’s electronic trades will be booked today for settlement purposes. Brent crude oil for July settlement fell as much as 4.2 percent to $71.51 on the London-based ICE Future Europe exchange and was last at $72.06 a barrel. China Output China’s manufacturing index fell short of a median 54.5 estimate from 18 economists surveyed by Bloomberg News. Readings above 50 indicate an expansion. A separate manufacturing index released today by HSBC Holdings Plc and Markit Economics slipped to 52.7 in May, the lowest since June 2009. Oil also dropped as stock markets fell around the world. Europe’s Stoxx 600 Index declined 1.6 percent to 241.10 at 12:53 p.m. in London. Losses were led by BP Plc, which slumped the most in 18 years after Europe’s second-biggest oil company abandoned efforts to plug a leaking Gulf of Mexico well with a blast of pressurized fluids. The euro extended its longest monthly decline against the dollar in 10 years on concern Europe’s efforts to reduce budget deficits will stall the region’s economic growth. The 16-nation currency slipped to $1.2166 at 12:55 p.m. from $1.2306 yesterday. U.S. Economy Oil prices rose earlier in today’s electronic session after Federal Reserve Bank of Chicago President Charles Evans said yesterday that growth in the U.S. economy, the world’s biggest, will be sustained. Reports this week will probably show U.S. payrolls increased in May while factories continued to expand. Gains in manufacturing may be accompanied by a rebound in service industries, which make up about 90 percent of the economy, based on a Bloomberg News survey of economists. “Prices are very sensitive to any news at the moment. The Chinese data was not that bad,” said Thina Saltvedt, a commodities analyst at Nordea Bank AB in Oslo. With signs of rising fuel demand in the U.S., “it seems like the underlying macro economic data is okay. When risk appetite comes back to the market, prices should move up.” An estimated 28 million people were expected to take road trips in the U.S. over the three-day Memorial Day weekend, according to AAA, the country’s biggest motoring organization. That’s up 5.8 percent from last year, and the first increase since 2005. U.S. gasoline demand peaks June through August. The Atlantic hurricane season, which begins today and runs through November, has a 70 percent probability of having between 14 and 23 named storms, according to the National Oceanic and Atmospheric Administration. Eight to 14 of those storms are expected to become hurricanes and three to seven are forecast to become major systems with winds of at least 111 miles (178 kilometers) per hour, NOAA said in a forecast last week. The Gulf is home to about 30 percent of U.S. oil and 12 percent of U.S. natural gas production, according to government data. To contact the reporters on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

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