2023.05.3118:54:00UTC+00Oil Futures Settle Sharply Lower On Demand Worries

Crude oil prices fell sharply on Wednesday as worries about fuel demand resurfaced after data showed a contraction in manufacturing activity in China.

A stronger dollar weighed as well on oil prices. The dollar index climbed to 104.70 earlier this afternoon, gaining about 0.5%. However, the index pared most of its gains subsequently and was at 104.30 a little while ago.

West Texas Intermediate Crude oil futures for July ended higher by $1.37 or about 2% at $68.09 a barrel.

Brent crude futures were down $1.10 or 1.49% at $72.61 a barrel a little while ago.

According to the latest survey from the National Bureau of Statistics, the manufacturing sector in China continued to contract in May, and at a faster rate. The NBS Manufacturing PMI fell to a five-month low of 48.8 in May from 49.2 in April. Ecomomists had expected a reading of 51.4.

The bureau also said the non-manufacturing index came in with a score of 54.5, again missing forecasts for 54.9 and down from 56.4 in the previous month.

The composite index had a score of 52.9, down from 54.4 a month earlier.

On the debt ceiling deal front, the U.S. House Rules Committee voted 7-6 Tuesday to advance a bill dealing with the federal debt ceiling to the full House.

The U.S. House of Representatives will vote on the bill later today to raise the $31.4 trillion debt ceiling.

Traders await the meeting of the Organization of the Petroleum Exporting Countries and allies, collectively known as OPEC+, later this week.