Crude-oil prices edged lower in Asia Monday on concerns about economic growth in China and following the biggest one-day percentage increase in Nymex benchmark futures since March 2009 last week.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in August traded at $83.74 a barrel at 0645 GMT, down $1.22 in the Globex electronic session. August Brent crude on London's ICE Futures exchange fell $1.25 to $96.55 a barrel.
Official data showed China's manufacturing activity in June grew at the slowest pace since November, indicating the world's second-largest economy likely hasn't bottomed out. China's Purchasing Managers Index fell to 50.2 in June from 50.4 in May but was higher than an expected 49.8.
Earlier Monday, a second set of data confirmed the slowdown. HSBC's final China manufacturing PMI for June dropped to 48.2 from 48.4 in May, as orders fell and business conditions worsened at Chinese factories.
Nymex oil prices are also retreating after rising 9.36% Friday in a cross-market rally following an agreement by European leaders to use bailout funds to directly help struggling banks in Spain and Italy.
While sentiment is still positive, investors are looking for further details of the bailout plan.
"Ultimately, without some form of debt forgiveness, it is still murky if Friday's summit measures are sufficient to salvage the situation [in Europe]," OCBC Bank said in a note.
It is unclear if the overall rally will sustain itself. But any downside to crude-oil futures is likely to be limited, as the EU embargo on Iranian oil took effect Sunday, though it has been largely factored into oil prices.
"Calls by Iran for an emergency OPEC meeting to discuss oversupply and the impact on oil prices may also provide a boost this week, although external macro market performance will likely have a bigger influence," ANZ said in a note.
U.S. markets will be closed Wednesday due to Independence Day celebrations. For this week, oil markets will track Tuesday's factory orders report and U.S. non-farm payrolls data Friday, among other data releases.
Nymex reformulated gasoline blendstock for August--the benchmark gasoline contract--fell 295 points to $2.6023 a gallon, while August heating oil traded at $2.6753, 346 points lower.
ICE gasoil for July changed hands at $854.50 a metric ton, up $6.00 from Friday's settlement.
