Oil slips to near $103, China factory index drops

Oil slips to near $103 after survey shows China manufacturing shrank in February

Associated Press

Oil prices slipped Thursday after a report indicated manufacturing in China, the world's second biggest economy, shrank again in February.

Benchmark U.S. crude for March delivery was down 9 cents to $103.22 a barrel at 0720 GMT in electronic trading on the New York Mercantile Exchange. The contract expires Thursday. It rose 88 cents to $103.31 a barrel on Wednesday. The April contract was down 18 cents at $102.66.

Oil fell after a monthly survey of factory managers by HSBC found that China's manufacturing, a pillar of the economy, contracted for a second straight month.

The HSBC purchasing managers' index also declined to the lowest since July, a sign of the extended slowdown in China as leaders in Beijing try to clamp down on an investment boom and refocus the economy on domestic consumption.

"Results from this private sector survey have deteriorated for four months now, which indicates an unambiguous trend of domestic growth deceleration," Societe-Generale economist Wei Yao said in a report.

Slower economic growth means less demand for energy.

Bent crude, a benchmark for international oils, was down 58 cents at $109.89 a barrel on the ICE exchange in London.

Energy markets are also looking ahead to a report by the U.S. Energy Information Administration on U.S. stockpiles of crude and refined products.

The report, due out later Thursday, is expected to show an increase of 1.9 million barrels in crude oil stocks and a reduction of 1.3 million barrels in gasoline stocks in the week to Feb. 14, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

In other energy futures trading on Nymex:

— Wholesale gasoline lost 1.5 cents to $2.982 a gallon.

— Heating oil inched down 1.1 cents to $3.062 a gallon.

— Natural gas fell 17.1 cents to $5.978 per 1,000 cubic feet.

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