New York: US oil prices plunged more than $3 Tuesday following weak manufacturing data from China and Europe and amid generous supplies around the world.
US benchmark West Texas Intermediate for October delivery sank $3.08 to $92.88 a barrel on the New York Mercantile Exchange, its lowest level since January. NYMEX was closed Monday due to the Labor Day holiday in the US.
European benchmark Brent oil for October delivery fell $2.45 to $100.34 a barrel. Earlier Tuesday, Brent had gotten as low as $100.17, its lowest level since May 2013.
China, the world`s second-biggest oil consumer after the US, said on Monday that its official purchasing managers` index (PMI) of manufacturing activity slipped to 51.1 last month, down from 51.7 in July and the first decline since February. A reading above 50 indicates growth, while below that level suggests contraction.
In Europe, Markit`s PMI of output in the 18-nation eurozone`s manufacturing sector fell to a 13-month low of 50.7 in August from 51.8 in July.
In the US, the PMI for manufacturing jumped to 59.0 in August, according to the Institute for Supply Management, but that was no help for gas prices.
"Geopolitical tensions persist across the globe, but for now prices focus on the prospect of softer fundamentals going forward," said Matt Smith, analyst at Schneider Electric.
"The oil markets are coming under renewed selling pressure that reflects a dominant bearish market sentiment that combines worry over demand and indications of amply current supply," said Tim Evans, energy analyst at Citi Futures.
Analysts said the stronger dollar was also a factor in Tuesday`s big drop in oil prices.
Because oil is denominated in dollars, the commodity becomes more costly outside the US when the greenback strengthens against other currencies, hitting demand.
