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Crude oil slips below US$103 on February fall in China's manufacturing activity

An oil worker holds raw tar sand near Fort McMurray, on July 9, 2008. THE CANADIAN PRESS/Jeff McIntosh

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An oil worker holds raw tar sand near Fort McMurray, on July 9, 2008. THE CANADIAN PRESS/Jeff McIntosh

The price of oil slipped below US$103 a barrel Thursday after a report indicated that manufacturing in China, the world's second-biggest economy, shrank again in February.

Benchmark West Texas Intermediate crude for March delivery fell 39 cents to close at US$102.92 a barrel on the New York Mercantile Exchange on the last day of trading for the contract. Crude for April delivery fell nine cents to close at US$102.75.

Oil prices fell after a monthly survey by HSBC found that China's manufacturing, a driver of the global economy, contracted for a second straight month.

The HSBC purchasing managers' index also declined to the lowest since July, a sign of the extended slowdown in China as leaders in Beijing try to clamp down on an investment boom and refocus the economy on domestic consumption.

"Results from this private sector survey have deteriorated for four months now, which indicates an unambiguous trend of domestic growth deceleration," Societe Generale economist Wei Yao said in a report.

Uncertainty about protests in Venezuela, a major U.S. oil supplier, as well as export disruptions in Libya and South Sudan kept a floor under oil prices.

Prices were also steadied by a weekly report from the U.S. Energy Department released Thursday that showed oil stockpiles grew about half as fast as expected, according to analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos.

Brent crude, a benchmark for international oil used by many U.S. refineries, fell 17 cents to close at US$110.30 a barrel on the ICE Futures exchange in London.

The price of natural gas fell 1.4 per cent to close at $6.06 per 1,000 cubic feet, retreating somewhat after Wednesday's 11 per cent surge to $6.15, its highest level since December of 2008.

In other energy futures trading on Nymex, wholesale gasoline rose 2.2 cents to close at US$2.847 a U.S. gallon (3.79 litres) and heating oil rose 3.2 cent to close at US$3.178 a gallon.

(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS), (TSX:CVE)

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