Oil drops on weak Chinese manufacturing PMI data

Oil benchmarks slid in early Asian trading on Tuesday following weak manufacturing data from China.

A preliminary manufacturing purchasing managers’ index (PMI) data release from HSBC and Markit Economics, saw Chinese activity decline to an 11-month low of 49.2 in March, down from February’s 50.7. A figure below 50 is indicative of contraction.

Following the data release, Brent front month futures contract was down 0.80% or 45 cents to $55.52 per barrel, with WTI at $46.82 down 63 cents or 1.33%.

Premier Li Keqiang has set China’s lowest growth rate target in more than 15 years to “around 7%”. China is looking to revive its economy via successive interest rate cuts in recent months. However, the monetary policy measures are yet to filter through to the wider economy.

Later on Tuesday, the American Petroleum Institute will publish its weekly oil inventory data, with US shale output tipped to decline.