Oil slid more than 3 percent to below $100 a barrel on Wednesday as soft economic data from China and the United States and a record level of U.S. crude oil stocks darkened the outlook for global demand.
Continue Reading Below
Brent crude futures were down $3.03 to $99.34 a barrel by 12:15 p.m. EDT (1615 GMT), and dipped below $99 for the first time since April 23.
The contract slid 7 percent in April, its biggest monthly drop in 11 months, on the back of indicators suggesting the global economy remains in a fragile state.
Crude stocks in the U.S. rose by 6.7 million barrels last week to their highest level on record at 395.3 million barrels, data from the Energy Information Administration showed, far exceeding forecasts of a 1 million barrel build and further pressuring U.S. oil prices.
U.S. oil was down $3.00 at $90.46 a barrel, falling through its 50-day, 100-day, and 200-day moving average, key technical indicators watched by traders.
Tim Evans, energy specialist at Citi Futures Perspective in New York, said he believed U.S. oil was still relatively expensive given current supply and demand dynamics, citing $80 to $85 prices as making "more sense" to him.
Continue Reading Below
"Do you want to get the 'glut' word out? If not now, then when?" he asked.
"These are the highest crude stocks ever. We're not running out of the stuff."
Growth in China's manufacturing sector unexpectedly slowed in April as new export orders fell, raising fresh doubts about the strength of the economy after a disappointing first quarter.
"China's manufacturing data was a big miss, and obviously when China speaks, we listen," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.
In the United States, the pace of manufacturing growth slowed in April as the sector expanded only modestly, an industry report showed, adding to signs the economy cooled as the second quarter got underway.
Figures on private-sector jobs growth also came below market expectations, two days before the government's closely watched non-farm payrolls data.
A two-day Federal Reserve committee meeting is set to wrap up later on Wednesday, and the Fed is widely expected to maintain its stimulus policy to support an economic recovery that is still too weak for the job market to truly heal.
The ECB is widely expected to cut interest rates to a new record low of 0.5 percent after data showed inflation in the euro zone had fallen to a three-year low and unemployment had hit a record of 12.1 percent.
Fundamentals also appeared bearish.
Supply from the Organization of the Petroleum Exporting Countries is predicted to average 30.46 million barrels per day (bpd)in April, up from 30.18 million bpd in March, a Reuters survey showed.
Saudi Arabia's energy minister said on Tuesday the kingdom did not plan to expand its oil production capacity to 15 million barrels per day, dispelling a suggestion put forth by a member of the royal family.
The Buzzard oilfield in the North sea, an important contributor to the Brent crude benchmark, was on schedule to restart later on Wednesday, trade sources said, after a steam release caused the field to be shut down on Monday. (Additional reporting by Ron Bousso in London, Aaron Sheldrick and James Topham in Tokyo; editing by Gunna Dickson)