Oil drops 6 percent on China data, slim chances of OPEC deal
By Devika Krishna Kumar
NEW YORK (Reuters) - U.S. crude oil prices fell 6 percent on Monday as weak economic data from China, the world's largest energy consumer, reversed a four-day rally from last week and an OPEC source undermined chances of an emergency meeting to stem the decline.
China's manufacturing sector contracted at the fastest pace since 2012 in January, adding to worries about demand from the world's second-biggest economy at a time when the market is already weighed down by a large supply overhang.
"China is the last standing consumer of oil outside of the U.S.. The problem is that everyone is relying on them," said Carl Larry, director of business development at Frost & Sullivan in Houston.
"As long as we keep in this scenario where China is the only real consumer to pick up the pace, we're going to see moves lower every time China has an issue with their economy."
Brent April crude futures LCOc1 were down $1.64, or 4.6 percent, at $34.35 a barrel by 12:09 p.m. EST.
U.S. West Texas Intermediate (WTI) CLc1 fell $1.99, or 5.9 percent, to $31.63.
A drop in all three major U.S. stock indexes after data showed manufacturing activity was weak in January and consumer spending was unchanged in December, also weighed on oil prices. Traders have been watching the equity markets closely to get a reading of the health of the economy.
A mild winter has also dented demand for oil and latest weather forecasts calling for warm weather through mid-February sent U.S. New York Harbor heating oil hoc1 futures down 5 percent. Continued...