Crude oil plunges to 3-week low on U.S., China PMI data

Investing.com - Crude oil futures tumbled sharply on Thursday, falling to a three-week low after U.S. and Chinese data pointed to slower growth in the world's two biggest economies.

Market sentiment was also dampened after Federal Reserve Chairman Ben Bernanke said Wednesday the central bank could begin tapering its bond-buying program in the "next few meetings”.

On the New York Mercantile Exchange, light sweet crude futures for delivery in July traded at USD92.30 a barrel during U.S. morning trade, down 2.1% on the day.

New York-traded oil prices fell by as much as 2.2% earlier in the session to hit a daily low of USD92.24 a barrel, the weakest level since May 2.

Crude prices fell to the lowest levels of the session after market research group Markit said that its preliminary U.S. manufacturing purchasing managers’ index fell to a seven-month low of 51.9 in May from a final reading of 52.1 in April.

The disappointing data came after a report earlier showed that China’s HSBC Flash Purchasing Managers Index fell to a seven-month low of 49.6 in May from a final reading of 50.4 in April.

The U.S. and China are the world’s two largest oil consuming nations and manufacturing numbers are used as indicators for fuel demand growth.

Prices came under additional pressure after Federal Reserve Chairman Ben Bernanke said Wednesday the bank could begin tapering its bond-buying program in the "next few meetings”.

In testimony to the U.S. Joint Economic Committee on Wednesday, Bernanke said a decision to scale back the Fed’s asset purchase program could be taken in the "next few meetings" depending on economic data.

Meanwhile, Wednesday’s minutes from the U.S. central bank’s May meeting showed a "number" of policymakers were prepared to taper bonds purchases as soon as June.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for June delivery dropped 1.7% to trade at USD100.82 a barrel, with the spread between the Brent and crude contracts standing at USD8.52 a barrel.

The gap between the contracts narrowed to the lowest level since January 2011 last week, amid an improving production outlook in the North Sea and indications of declining stockpiles at Cushing, Oklahoma, the delivery point for Nymex oil futures.