Oil declined before an Institute for Supply Management report today that may show manufacturing in the U.S., the world’s biggest user of oil, contracted in February. China’s manufacturing shrank for a seventh month. Prices also fell as equities markets declined and the dollar rose, reducing the appeal of commodities priced in the U.S. currency.
Crude oil for April delivery fell as much as $2.42, or 5.4 percent, to $42.34 a barrel in electronic trading on the New York Mercantile Exchange. It was at $42.40 a barrel at 11:41 a.m. London time. Futures have dropped 70 percent from the record $147.27 a barrel reached on July 11.
Brent crude for April settlement declined as much as $2.05, or 4.4 percent, to $44.30 a barrel on London’s ICE Futures Europe exchange. It was at $44.33 a barrel at 10:01 a.m. local time.
The Institute for Supply Management’s factory index fell to 34 in February from 35.6 the prior month, according to the median of analysts’ estimates before a report today. A reading of 50 is the dividing line between growth and contraction.
Oil also fell as stock markets in Europe and Asia and U.S. futures slumped. The MSCI World Index of 23 developed countries sank 1.9 percent to 736.68 at 11:30 a.m. in London.
Officials from the Organization of Petroleum Exporting Countries, the supplier of 40 percent of the world’s oil, gave conflicting signals on their intentions to further cut output to bolster prices when they meet in Vienna on March 15.
Crude oil, which fell to a five-year low of $33.87 on Dec. 19, has rebounded as OPEC restricted supply. At its last meeting in December, members agreed to a record 9 percent reduction in supply targets effective Jan. 1, extending two earlier resolutions to curb production as the global economy sank into a recession, straining the budgets of crude exporters.