By Surabhi Sahu Of DOW JONES NEWSWIRES SINGAPORE (Dow Jones)--Crude-oil futures fell Thursday as concerns about slowing manufacturing activity in China more than offset a surprise drop in U.S. crude inventories. On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at $106.44 a barrel at 0640 GMT, down $0.83 in the Globex electronic session. May Brent crude on London's ICE Futures exchange fell $0.65 to $123.55 a barrel. U.S. oil inventories fell by 1.2 million barrels in the week ended March 16, the U.S. Energy Information Administration said late Wednesday. This is broadly in line with data the American Petroleum Institute released Tuesday that showed a decline of 1.4 million barrels, but was well off analysts' estimates of a rise of more than 2 million barrels. "There's been some selling pressure reflecting weak China PMI," said a Tokyo-based trader, who tipped support for the U.S. benchmark at $105 a barrel in Thursday's session. The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to 48.1 in March compared with a final reading of 49.6 in February, HSBC Holdings said Thursday. A reading below 50 indicates a contraction from the previous month. Also weighing on prices were reports Wednesday that France was mulling a release of strategic oil reserves in coordination with other nations, trading executives said. Saudi Arabia earlier this week sought to assure market participants that it could increase production to meet any supply shortfall and rein in prices. This helped quell worries about a possible severe supply disruption in the event of an escalation of tensions between Iran and the West, sending prices lower. "Although the Iranian nuclear factor continues to lurk in the background as a latent bullish consideration, we feel that Iran's risk premium is fully priced in short of an actual military confrontation," Jim Ritterbusch at Ritterbusch & Associates said in a note. Ritterbusch tipped Brent to trade in a range of $121-$125.50 a barrel in the coming sessions. Market participants are likely to focus on macroeconomic data, including U.S. jobless claims due late Thursday from the U.S. Labor Department. Signs of a significant improvement in U.S. employment will be bullish for crude-oil prices. Nymex reformulated gasoline blendstock for April--the benchmark gasoline contract--fell 112 points to $3.3459 a gallon, while April heating oil traded at $3.2089, 73 points lower. ICE gasoil for April changed hands at $1023.50 a metric ton, down $3.25 from Wednesday's settlement. -By Surabhi Sahu, Dow Jones Newswires; +65 6415 4086; surabhi.sahu@dowjones.com

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