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Oil prices slump on Chinese data

Last updated: 09:46 23 Nov 2011 EST, First published: 10:46 23 Nov 2011 EST

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Oil prices tumbled this afternoon, hit by disappointing Chinese data, which added to concerns that economic growth in the world’s second largest energy consumer is slowing.

HSBC today revealed that its China purchasing managers index (PMI) slumped from 51 in October to 48 this month, the lowest level in nearly three years.

The decline in industrial activity is seen as a result of a series of monetary policy tightening measures implemented by the Chinese government in an effort to curb growth in consumer prices.

Apart from several increases in reserve requirements for banks, China has hiked its interest rates three times so far this year.

Futures for crude oil received some support from today’s US inventories data, which showed that crude oil stockpiles shed a massive 6.2 million barrels last week.

The data was interpreted as a sign that oil demand in the US is one the rise and partly offset the negative impact from yesterday’s downbeat GDP update.

The US Commerce Department said yesterday that it has revised its US economic growth estimate for the third quarter from 2.5 percent to two percent, dampening optimism that the economic recovery is getting back on track.

US light, sweet crude for January delivery, currently the most actively traded contract on the New York Mercantile Exchange (NYMEX), fell US$2.36 to US$95.65/barrel in morning trade in New York.

January Brent crude slipped US$1.56 to US$107.35/barrel on the ICE Exchange this afternoon.

Today’s top risers in the oil and gas sector were:

Serica Energy (LON:SQZ), up 8 percent at 18.75 pence at midday

TXO (LON:TXO), up 6.5 percent at 0.773 pence

Amerisur Resources (LON:AMER), up 5 percent at 15.75 pence

Sterling Energy (LON:SEY), up 4 percent at 41.62 pence

Desire Petroleum (LON:DES), up 4 percent at 22.83 pence

The top fallers were:

Ascent Resources (LON:AST), down 16 percent at 1.62 pence at midday

3Legs Resources (LON:3LEG), down 13 percent at 63.5 pence

Xtract Energy (LOON:XTR), down 8 percent at 1.91 pence

Gulf Keystone Petroleum (LON:GKP), down 7 percent at 145.5 pence

Chariot Oil & Gas (LON:CHAR), down 6.5 percent at 113.36 pence

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