Oil declined for a third day as China manufacturing contracted and protracted negotiations to resolve Greece’s debt crisis fanned concern that Europe’s debt crisis will harm fuel consumption.
Prices declined as much as 1.4 percent as the preliminary January reading of a Chinese purchasing managers’ index showed the country’s manufacturing contracted for a third month. Talks in Athens on debt swaps entered a third day, with Greek officials and private creditors struggling to agree on a plan.
“We are reacting to the Chinese manufacturing index, which is weak,” said Phil Flynn, an analyst with PFGBest in Chicago. “The market is still worried about Greece and Europe. Oil demand is not coming back yet.”
Crude for February delivery fell $1.39, or 1.4 percent, to $99 a barrel at 9:21 a.m. on the New York Mercantile Exchange. The contract expires today. The more active March contract declined $1.40 to $99.14.
Brent oil for March settlement declined 67 cents, or 0.6 percent, to $110.88 a barrel on the London-based ICE Futures Europe exchange.
The reading of 48.8 of the Chinese index, released by HSBC Holdings Plc and Markit Economics today, compares with a final 48.7 number for December. A reading below 50 shows contraction.
Greek officials will resume talks with private creditors later today on the final details of a debt swap deal that’s crucial to lowering the country’s borrowings and freeing up a second round of international aid, Greek Finance Minister Evangelos Venizelos told reporters.
International Monetary Fund Managing Director Christine Lagarde said the world economy is decelerating and faces “significant and urgent challenges.”
