Oil Prices Fell as Output in China and Europe Declines

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  • AP/Hasan Jamali

    AP/Hasan Jamali

    TEMPO.CO, Jakarta - Oil prices fell in Asia on Tuesday, amidst disappointing news from China and Europe's main energy consumers. Analysts are also saying that the condition is further fueled by investors who are choosing to wait for the latest release of United States (US) manufacturing data.

    The prices for October deliveries of light sweet crude oil, also known as the West Texas Intermediate (WTI), which is used as a benchmark by the US fell by 21 cents to US$ 95.75, whereas the prices for October deliveries of the Brent crude oil inched down 3 cents to trade at US$102.76 at the end of trading on Monday.

    "The consensus among manufacturers across China and the Eurozone is not helping with investors' risk appetite," said France's Credit Agricole Bank in a statement.

    China has said on Monday that its' official Purchasing Managers' Index retreated to 51.1 last month after recording a two-year high in July at 51.7, marking the first such decline since February. In reading the PMI, any value above 50 indicates a growth, while any value below 50 signifies an economic contraction is underway.

    Across Europe, PMI declined to 50.7 in August, down from 51.8 in July.

    Investors are still waiting for the PMI for the US, which will be released on Tuesday by the Institute of Supply Management. Credit Agricole predicts that the US PMI for August will retreat to 56.2 from 57.1 in July. The US market is closed for trading on Monday in celebration of Labour Day.

    The US construction data, another important economic indicator of the health of the world's largest economy, will also be released on Tuesday.

    The conflicts that continue to destabilize the world's main crude oil producers, namely Libya and Iraq, is a factor that is causing the general uptrend of global crude oil prices. The civil war that is going on in Ukraine is also a contributing factor, as the main export pipeline for Russian gases to Europe passes through the country thus driving prices up, said an analyst to AFP.