Forexpros - Crude oil futures tumbled to a one-week low on Thursday, as dismal manufacturing data from China and the euro zone added to worries over the global economic outlook, dragging down oil prices, while talk that industrialized nations are considering a release from strategic stockpiles also weighed. On the New York Mercantile Exchange, light sweet crude futures for delivery in May traded at USD105.02 a barrel during U.S. morning trade, plunging 2.1%. It earlier fell by as much as 2.45% to trade at USD104.53 a barrel, the lowest since March 15. Oil prices came under heavy selling pressure during Asian trading hours following the release of a preliminary estimate of HSBC’s China manufacturing Purchasing Managers’ Index, which fell to a four-month low and remained in contractionary territory for the fifth consecutive month. The soft PMI data marked the latest in a string of negative headlines on China's economic outlook. Beijing recently downgraded its growth outlook for 2012, while investors were spooked by a large trade deficit for February and comments this week from mining giant BHP Billiton that demand for iron ore will flatten amid a slowdown in China's economy. A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe. China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand. Further weighing on energy prices, German manufacturing activity dropped to a four-month low in March, while manufacturing in France also contracted. A separate report showed that manufacturing activity in the euro zone slumped unexpectedly in March, remaining in contraction territory for the eighth consecutive month. Renewed concerns over the fiscal health of debt-laden euro zone members, Spain, Portugal and Italy also weighed. The euro zone accounted for nearly 16% of global oil consumption last year. Manufacturing numbers are used as indicators for fuel demand growth. Prices briefly pared losses following the release of data showing that U.S. jobless claims fell to the lowest level since February 2008 last week. Oil traders have been paying close attention to readings on U.S. employment levels for signs that people are returning to work, thus driving more and using more energy. Reports that France and other industrialized nations are considering a release from strategic stockpiles also weighed. French Industry Minister Eric Besson said the country is “studying with its partners all possible options,� including the supply of oil from emergency reserves. South Korea would support a release by industrialized countries of oil from strategic reserves to help stem high prices, but has yet to receive a request from the International Energy Agency or its members to do so, a government source said on Thursday. U.S. President Barack Obama discussed releasing emergency oil supplies with U.K. Prime Minister David Cameron on March 14 but the leaders reached no agreement, according to Cameron and Jay Carney, the White House press secretary. Meanwhile, market participants continued to monitor lingering tension between Iran and the West. Iran and Western nations have been locked in a stand-off in recent months over Tehran's nuclear program. There are fears that the escalating rift over Tehran's nuclear program could lead to an oil-export halt, a disruption to shipping traffic in the Strait of Hormuz or military conflict. A potential loss of Iranian barrels has help underpin a 17% surge in crude prices this year, and could take the market higher when sanctions are enforced on July 1. But some of those fears receded Wednesday after Saudi Arabia said the country can increase crude production by as much as 25% immediately if needed. Elsewhere, on the ICE Futures Exchange, Brent oil futures for May delivery fell 1.1% to trade at 122.81 a barrel, with the spread between the Brent and crude contracts standing at USD17.83.

Source