New York - An afternoon recovery in United States stock markets helped oil reverse early losses on Thursday.
Benchmark oil for July delivery fell three cents to close at $94.25 a barrel on the New York Mercantile Exchange. The price sank as low as $92.21 in the morning after weak manufacturing data from China raised questions about the strength of oil demand in the world's No. 2 economy.
Global stock markets showed sharp declines amid indications that the US Federal Reserve may pull back on its economic stimulus programme.
Tokyo's Nikkei 225 index of shares fell 7.3 percent. But US stocks recouped most of their losses by midday, as investors saw the declines as overdone. Oil traders followed, at one point pushed oil to a small gain.
HSBC said a preliminary version of its monthly purchasing managers' index fell to 49.6 for May from 50.4 in April. Numbers below 50 indicate contraction. That sank oil prices because a downturn in energy-hungry China would likely lead to a decline in crude demand.
Ample US supplies of crude oil and refined products such as gasoline continue to weigh on oil prices, even as the summer driving season gets under way in the US with Memorial Day weekend.
“Ahead of the start of the summer driving season, (gasoline) stocks are six percent up on the long-term average and 10 percent higher than last year's level,” said a report from Commerzbank.
Brent crude, a benchmark for many international oil varieties, fell 16 cents to $102.44 a barrel on the ICE Futures exchange in London. - Sapa-AP