Oil prices skid on sluggish European, China data

	Photos 1 of 1 Oil pipelines near a refinery in Sitra, Bahrain, in the Persian Gulf.

NEW YORK: Oil prices slid on Tuesday after a series of sluggish European and Chinese economic indicators sparked concerns about energy demand.

New York's main contract, light sweet crude for delivery in July, closed at 72.58 dollars a barrel, down 1.39 dollars from Friday. The US markets were closed on Monday in observance of a federal holiday.

In London, Brent North Sea crude for July dropped 1.94 dollars to settle at 72.71 dollars.

The benchmark US futures contract had rebounded last week from lows below 70 dollars to about 75 dollars.

But after the long holiday weekend, the market was focused on economic storm clouds in the eurozone and China.

In the 16-nation eurozone, the unemployment rate rose to a record 10.1 percent in April from 10.0 percent the prior month, official data showed.

Eurozone manufacturing activity slowed in May to a level not seen since the collapse of US investment bank Lehman Brothers in September 2008, according to a purchasing managers index (PMI) compiled from an industry survey.

The euro fell to a four-year low against the dollar at almost 1.21 dollars, helping to dampen demand for dollar-priced oil.

In China, the world's second-largest energy-consumer after the United States, manufacturing activity slowed in May as government brakes to keep the economy from overheating kicked in, HSBC bank data showed.

A separate survey released by a Chinese government agency on Tuesday showed manufacturing activity had dropped to 53.9 in May from 55.7 in April.

The government survey predicted the Chinese economy would continue to grow rapidly, but at a moderately slower pace.

"That dip in Chinese manufacturing seems to suggest that perhaps China is getting impacted by the economic turmoil in Europe," said Phil Flynn at PFG Best.

"China exporters count on Europe to buy their goods but it is possible that because of the turmoil it's happening at a slower pace."

Weakness in China unsettles the oil market, which is depending on the Asian giant as the leading driver of growth in global energy demand amid a fragile recovery from recession.

Bart Melek of BMO Capital Markets said the weak Chinese PMI "points to a little bit slower growth in China - that is responsible for lower oil (prices) today."

"We're going to need some positive catalysts, and so far they have not really come," he added. - AFP/de

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