By Rowena Edwards
LONDON (Reuters) -Oil prices fell on Tuesday on weak economic data from China and expectations of interest rate hikes by the U.S. Federal Reserve and European Central Bank (ECB) this week.
Brent crude fell 42 cents, or 0.53%, to to $78.89 a barrel by 1037 GMT while U.S. West Texas Intermediate (WTI) crude lost 46 cents, or 0.61% to $75.20.
Both benchmarks fell by more than $1 in the previous session.
Price pressure followed official data on Sunday showing manufacturing activity in China, the world’s top crude importer, fell unexpectedly in April. This marks the first contraction in the manufacturing purchasing managers’ index since December.
“Most sub-indicators show that this might not be a short-term aberration,” said Iris Pang, Greater China chief economist at ING, pointing to a weakening export market, lower imports in March and falling wages.
A cloudly economic outlook in other parts of the world also weighed on prices, analysts said.
“The unpredictable action of central banks in their mission to tame elevated consumer and producer prices, the rhetoric and action of consuming and producing nations have all cast a rather long shadow of doubt on prospects going forward,” oil broker PVM’s Tamas Varga said.
Investors will look for market direction from expected interest rate hikes by inflation-fighting central banks, which could slow economic growth and dent energy demand.
The U.S. Federal reserve is expected to increase interest rates by another 25 basis points on Wednesday.
The ECB is also expected to raise rates at its regular policy meeting on Thursday.
Euro zone inflation has slowed sharply from double-digit readings late last year but remains high, making another rate hike a necessity and leaving only its size up for debate, with ECB policymakers split between a move of 25 or 50 basis points.
A poll on Monday showed that U.S. crude oil stockpiles, meanwhile, are expected to have fallen for a third consecutive week, providing some oil price support. [EIA/S]
The poll was conducted ahead of reports from the American Petroleum Institute, due at 4:30 p.m. EDT (2030 GMT) on Tuesday.
(Reporting by Rowena Edwards in LondonAdditional reporting by Emily Chow in SingaporeEditing by David Goodman)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.