Bangkok - The price of oil fell to near $93 a barrel Tuesday as traders scaled back their optimism about the US economy following a report that showed shrinking factory activity.
Benchmark oil for July delivery fell 44 cents to $93.01 a barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange.
The contract rose $1.48 to close at $93.45 a barrel on the Nymex on Monday.
Data showing that manufacturing activity in the US slowed in the month of May boosted energy markets Monday.
Traders believe the weaker the economy, the less likely it is for the US Federal Reserve to pull back on its monetary stimulus measures.
The Institute for Supply Management said Monday that its index of manufacturing activity fell to 49 last month from 50.7 in April. Readings below 50 indicate a contraction.
But analysts at DBS Bank Ltd. in Singapore said the data was worrisome because it reflected a trend, not a one-time event, since the reading has dropped every month since February.
“The ISM dropped to 49 in May. That's not weak, that's negative. Below zero. Under water ... best not to look for a rebound next month,” DBS said in a market commentary.
Brent crude, a benchmark for many international oil varieties, fell 28 cents to $101.78 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the New York Mercantile Exchange:
- Wholesale gasoline added 0.5 cents to $2.79 a gallon.
- Heating oil rose 0.2 cent to $2.8354 per gallon.
- Natural gas fell 1.6 cent to $3.975 per 1,000 cubic feet. - Sapa-AP