(RTTNews) - The price of crude oil dipped below $106 Thursday morning amid speculation that slowdown in Chinese economic growth will hurt demand.
China's manufacturing sector activity shrank for a fifth consecutive month in the month, as output suffered a pullback due to weakening domestic demand in the world's second-largest economy, a survey by Markit Economics revealed. The headline flash HSBC/Markit manufacturing purchasing managers' index fell to 48.1 in March from 49.6 in February, with a PMI reading below 50 indicating contraction of the sector.
Light Sweet Crude Oil (WTI) futures for May delivery, were down $1.28 to $105.99 a barrel. Yesterday, oil ended higher after an Energy Information Administration report showed US crude stockpiles declined unexpectedly last week, a sign demand may be improving
Wednesday during trading hours, the EIA said that U.S crude oil inventories unexpectedly dipped by 1.20 million barrels and gasoline stocks eased a similar 1.20 million barrels in the weekended March 16. Analysts were expecting crude oil inventories to gain 2.10 million barrels and gasoline stocks to dip 1.80 million barrels last week.
This morning, the U.S. dollar was recovering from a 2-week low versus the euro and paring recent losses against sterling. The buck was leveling off from its 1-year peak versus the yen and edging higher against the Swiss franc.
In economic news, euro zone private sector activity deteriorated further in March, a survey by Markit Economics revealed. The flash composite output index fell to a three-month low of 48.7 in March from 49.3 in February. An index reading above 50 indicates expansion of the sector and a reading below 50 suggests contraction. Economists expected an improvement in the index reading to 49.6.
Separately, a flash data from Markit Economics revealed that Germany's private sector expanded only at a marginal pace in March as output growth eased to a four-month low. The flash Composite Output Index fell to 51.4 from 53.2 in February. Manufacturers and service providers both saw moderation in activity growth to three-month lows during March.
Traders will look to the weekly jobless claims data from the U.S. Labor Department due out at 8.30 a.m ET. Economists expect the claims to edge up to 354,000 from the last week's 351,000.
