Oil below $104 after report on China’s manufacturing improvement

PanARMENIAN.Net - Oil prices hovered below $104 a barrel Monday, April 23 in Asia after a report showed Chinese manufacturing may be improving, easing concerns that economic growth could slow sharply, The Associated Press reports.

Benchmark oil for June delivery was down 8 cents to $103.80 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.16 to settle at $103.88 in New York on Friday.

Brent crude for June delivery was steady at $118.76 per barrel in London.

HSBC said Monday that its preliminary manufacturing index rose to 49.1 in April from 48.3 in March, suggesting a slowdown of Chinese growth may have bottomed out in the first quarter.

While the index rose, it still showed a sixth month of contraction because any reading below 50 indicates a drop in industrial production.

Crude has slid from $110 last month amid investor worries that economic growth in the U.S. and China, the world's two largest oil consumers, may slow more than previously expected.

"The re-emergence of China and U.S. growth concerns, plus worries over Spanish sovereign debt, are undermining commodity prices," Barclays Capital said in a report. However, oil prices won't likely fall much "unless there is a major negative macro shock in the form of a deterioration in Europe or evidence of a hard landing in China, neither of which we think likely."

Investors this week will also be closely watching the latest data from the U.S. about housing prices and consumer confidence for clues about the strength of the economy and crude demand.

The Federal Reserve is scheduled to meet Tuesday and Wednesday to discuss the economy and monetary policy.

In other energy trading, heating oil was up 0.1 cent at $3.13 per gallon and gasoline futures gained 0.3 cents at $3.11 per gallon. Natural gas rose 2.1 cents at $1.95 per 1,000 cubic feet.