Oil Slips Below $75 Amid Global Doubts

Oil fell below $75 a barrel Friday, beginning the second half of the year on a weak note after falling nearly five per cent in the first half, as signs of slowing economic growth in China fuelled energy demand doubts.

The pace of manufacturing growth in the world’s second largest oil consumer slowed in June as government steps to cool the property market and curb bank lending combined with a faltering global recovery.

United States crude for August delivery fell $1.07 to $74.56 a barrel by 1137 GMT, declining for the fourth straight session and extending the 10 per cent slide of the second quarter, the first quarterly drop since 2008.

ICE Brent fell $1.17 to $73.84.

The China data, and Moody’s decision on Wednesday to put Spain’s credit ratings under review, got broader markets off to a weak start for the new quarter.

European equities fell one per cent, Japanese stocks slid to a seven-month low and China’s to a 15-month trough.

China’s official purchasing managers’ index (PMI) fell to a weaker-than-expected 52.1 in June, the lowest since February, from 53.9 in May.

The indicator remained above the 50 threshold that indicates an expansion.

Adding to negative sentiment on demand, US gasoline stockpiles posted surprise gains last week, government statistics showed, raising doubts about the speed of consumption recovery in the world’s top consumer.

Crude stockpiles fell two million barrels in the week to June 25, compared with expectations for a decline of 900,000 barrels.

Cushing, Oklahoma, crude supplies shed 795,000 barrels to 36 million barrels.

The recent slip from record high storage at the Cushing hub has helped narrow the price spread between the front-month and near-month US crude contracts.

The spread narrowed to 55 cents, from $1.27, which could signal an improvement in near-term demand.

Traders were also looking to the nation’s weekly jobless claims later and June’s employment report on Friday for further indications about the direction of the economy in the world’s largest fuel consumer.

Hurricane Alex drenched the Texas-Mexico border on Thursday as the powerful storm hit Mexico’s Gulf coast, spawning tornadoes and flooding towns, but it spared US oil wells.