WTI drops as global manufacturing misses estimates

West Texas Intermediate crude fell amid speculation that weakening manufacturing from Germany to China will cap global oil demand. Brent declined in London.

Futures dropped as much as 0.8 percent from the August 29 close.

Purchasing manufacturing indexes for Germany, Italy, the UK and China all came in below estimates for August, while OPEC’s output increased to the highest level in a year.

“All eyes are on the demand side, and weaker statistics for example in China are bearish,” Bjarne Schieldrop, chief commodity analyst in Oslo at SEB AB, said. “The increase in tension between Russia and Ukraine is bearish for oil” because economic sanctions on Russia may eventually result in a slowdown in Europe, he said.

WTI for October delivery declined as much as 78 cents to $95.18 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.27 at 10:06pm London time.

Prices decreased 2.3 percent last month and are down 3.2 percent this year.

Brent for October settlement was 82 cents lower at $101.97 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $6.69 to WTI, compared with a close of $7.23 on Aug. 29.

China’s manufacturing slowed more than projected last month, joining weaker-than-anticipated credit, production and investment data in indicating that the economy is losing momentum. The nation is the world’s second-largest oil consumer.

Markit Economics’ euro – area gauge slid more than initially predicted, with the index for Italy unexpectedly falling below 50, signalling the first contraction in 14 months.

In the UK, manufacturing expanded by the least in more than a year.

 “There are slowdowns occurring,” Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. “OPEC is producing enough oil to placate any issues,” he added.