On Monday, the rout deepened after data showed Chinese manufacturing growth unexpectedly stalled in July and U.S. consumer spending advanced at its slowest pace in four months in June as demand for automobiles softened.
“The prospects of a second half-year price rebound have evaporated and there is a clear and present danger of prices revisiting the previous lows of the year”, said David Hufton of oil brokerage PVM.
Last week, Reuters conducted a survey that highlighted an increase in oil output by the Organization of the Petroleum Exporting Countries (OPEC).
Brent crude prices have fallen below $50 per barrel for the first time since January. The gasoline crack, or spread with U.S. crude CL-RB1=R, narrowed to below $26, its lowest in more than a week.
Led by worldwide bench mark Brent crude, futures were slammed Monday on concerns about new supply coming on the market and worries about contracting demand from China. It is within $2 of the six-year low settlement price it hit in March.
WTI for September delivery rose 20 cents to $45.37/bbl in electronic trading on the New York Mercantile Exchange as of 7:45 a.m. Singapore time. The slightest of triggers has been enough to drag down oil in recent weeks. A Chinese private factory gauge released this week slipped to a two-year low in July, while an official index on Saturday dropped to a five-month low. It was the lowest reading since July 2013.
On Monday, traders continued to see China’s economy stumbling and Iran gearing up to add its supply to already swamped global oil markets, said Morgan Downey, a commodities trader and author of Oil 101.
Analysts said the small gains in Asian trading were likely to be capped as dealers focused on sluggish manufacturing data from energy guzzlers China and the United States.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.