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Oil futures slide further, test $91-a-barrel

Published: September 20, 2012 | 7:06 am
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HONG KONG — Crude-oil futures extended their steep recent decline in Asia on Thursday as high U.S. inventories and the prospect of more oil supplies from Saudi Arabia combined with weak Chinese manufacturing data to pressure the commodity.

October futures for light, sweet crude-oil futures (NMN:CLV2) skidded 97 cents, or 1.1%, to $91.01. The drop came on top of a 3.5% tumble in the contract in a regular New York Mercantile Exchange session on Wednesday.

At current prices, front-month crude-oil futures have slumped more than 8% just this week.

Preliminary data from HSBC on Chinese manufacturing conditions in September Thursday showed a drop in activity for the 11th straight month.

The HSBC “flash” purchasing managers’ Index for the world’s second-largest economy printed at 47.8, below the 50-point threshold that separates expansion and contraction, but up slightly from a final reading of 47.6 in August. Read full story on China PMI.

Tim Evans, an energy analyst at Citi Futures, said Wednesday’s steep fall in oil, which defied a rise on Wall Street, came as “money managers cut long positions in tacit recognition that the oil market has its own fundamentals, including ample current supplies.”

The sharp declines in crude-oil prices came as official data released by the Energy Information Administration showed U.S. inventories jumped 8.5 million barrels in the week ended Sept. 14, trouncing expectations for a 2.5 million-barrel increase.

A Financial Times report saying Saudi Arabia, the world’s largest petroleum exporter, has offered customers in the U.S., Europe and Asia extra oil supplies to offset rising oil prices also weighed down on the commodity. Read Market Extra on what’s behind oil’s steep fall this week.

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