SINGAPORE- Oil prices slipped in Asian trade Thursday following healthy gains in London and New York, but losses were limited as investors were cheered by signs of a recovery in China’s manufacturing sector.
The US benchmark, West Texas Intermediate (WTI) for delivery in July, eased seven cents to $104.00 in afternoon trade, after jumping $1.74 to close at a one-month high Wednesday.
Brent North Sea crude for July was down three cents at $110.51. The contract gained 86 cents in London, touching a level last seen in early March.
Banking giant HSBC said preliminary data from its purchasing managers index (PMI) showed activity in China’s factories shrinking at a much slower pace in May than April.
The banking giant’s PMI improved to 49.7 from 48.1 last month.
While the figure is below the 50-mark that suggests contraction, it is the second straight month of improvement and will fuel hopes the world’s number two economy is picking up after months of slowing.
“Chinese PMI came in a lot better than expected, especially since the past few Chinese data (releases) have been really weak,” Desmond Chua, market analyst at CMC Markets in Singapore, told AFP.
Crude prices are also being supported by a drop in US inventories, which indicate strong demand.
The US Department of Energy said stockpiles plunged 7.2 million barrels in the week ending May 16, confounding traders who expected a gain of 700,000.