Oil prices slump on fears of slowing demand from China

Oil prices diverted lower after trading began higher on Wednesday on fears of slowing demand from China, the world’s largest oil importer, following weaker-than-expected economic data.

Brent crude futures for August delivery fell 29 cents to $73.25 per barrel by 07:13 GMT, while U.S. West Texas Intermediate crude fell 11 cents to $69.35 per barrel. Both fell more than 4% on Tuesday.

China’s official manufacturing purchasing managers’ index fell to 48.8 from 49.2 in April, according to data from the National Bureau of Statistics.The PMI contravened expectations to rise to 49.4

In the United States, dealer morale improved slightly after legislation brokered by President Joe Biden and House Speaker Kevin McCarthy to raise the US debt cap of $31.4 trillion passed an important hurdle late on Tuesday, as it was passed by the Rules Committee and sent to the full House for consideration and a vote expected on Wednesday.

If Congress, in both houses of parliament and Senate, passed the legislation, the Biden administration would likely not need to negotiate the debt ceiling again before the November 2024 presidential election.

The deadline for repayment of U.S. debt coincides almost with the meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, in what is known as the “OPEC +” bloc, on June 4. It is not yet clear whether the conglomerate will increase production cuts, while the decline in prices weighs on the market.