Oil prices fall further in Asia

, May 6:

prices extended their losses in Asian trade today, spooked by a weak manufacturing sector in China, although there was some support from concerns about the crisis in Ukraine.

The US benchmark, West Texas Intermediate for June delivery, eased five cents to USD 99.43 a barrel in mid-morning trade while Brent North Sea crude for June dipped eight cents to USD 107.64.

Trading volumes were thin as markets in Japan and Hong Kong were closed for public holidays. Singapore's United Overseas Bank (UOB) said prices fell after a closely watched survey showed China's manufacturing sector contracted for a fourth consecutive month in April and at a faster pace than initially thought.

British banking giant HSBC said yesterday its purchasing managers' index (PMI) for China last month came in at 48.1, a tad up from the 48.0 in March but weaker than the 48.3 reported in its preliminary report on April 23.

A figure below 50 indicates contraction, while anything above points to growth. "Oil was pressured by the Chinese PMI report, adding to worries that the Chinese economy is still losing momentum," UOB said in a market commentary.

However, crude continue to be supported by the escalating violence in Ukraine, where the government is battling pro-Russian separatists. Fighting intensified between government forces and pro-Moscow secessionists yesterday, with Ukraine's military suffering heavy casualties and Russia warning the violence was putting peace in Europe in peril.

Ukraine is a major conduit for Russian oil and gas exports to Europe, and any escalation of the conflict could disrupt supplies and send prices soaring, analysts say.

AFP