SINGAPORE: Brent crude fell below $100 a barrel on Tuesday after manufacturing data from China pointed to a lukewarm recovery in the second quarter, denting the outlook for fuel demand in the world's second largest oil consumer.
The flash HSBC Purchasing Managers' Index for April fell to 50.5 in April from 51.6 the month before as new export orders shrank in China, suggesting the country faces considerable headwinds.
June Brent crude dropped 65 cents to $99.74 a barrel by 0502 GMT, while US crude for June delivery was down 61 cents at $88.58 a barrel.
"It's disappointing data from the previous month, but it's still above 50," said Tetsu Emori, a commodities sales manager at Astmax Investments in Tokyo. "I'm happy to buy on dips."
The PMI's 50-point level demarcates growth from contraction from the month before. The data comes after the unveiling of lower-than-expected GDP growth for China in the first quarter sparked a sell-off last week.
Brent settled above $100 on Monday for the first time in five sessions as traders saw oil below the psychological level as a bargain. The benchmark has fallen 10 percent from about $111 in early April on global growth concerns.
"People have been harping on about the recovery in the US but it seems to have fallen short of expectation with most recent data lukewarm," said Ben le Brun, a markets analyst at OptionsXpress in Sydney.
The decline has sparked speculation that OPEC could re-look at supply at its May 31 meeting although Libya has said it would seek to increase its output quota.
"Large stimulus programmes from Japan, the United States and China should support prices at around these levels as opposed to OPEC taking action," le Brun said.
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