Crude oil futures fell to the lowest level of the session during European morning hours on Thursday, after data showed that euro zone manufacturing data came in below expectations in February.
Prices were already on the back foot amid concern the Federal Reserve may scale back its stimulus program and market talk that a large hedge fund was liquidating positions.
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD93.58 a barrel during European morning trade, down 1.7% on the day.
New York-traded oil prices fell by as much as 1.7% earlier in the session to hit a daily low of USD93.58 a barrel, the weakest level since January 16.
Market research group Markit said that its preliminary euro zone manufacturing purchasing managers’ index fell to a seasonally adjusted 47.8 in February from a final reading of 47.9 in January.
Analysts had expected the index to ease up to 48.4 in February.
Meanwhile, Germany’s manufacturing purchasing managers’ index rose to a seasonally adjusted 50.1 in February from a final reading of 49.8 in January, moving into expansion territory for the first time in 12 months but slightly below expectations for an increase to 50.5.
The report also showed that service sector activity in Germany expanded at the slowest rate in two months in February, with the services PMI declining to 54.1 from 55.7 in January. Analysts had expected the index to ease down to 55.5.
The data came after a report showing that the French manufacturing PMI rose to 43.6 in February from a final reading of 42.9 in January, compared to expectations for a reading of 43.8.
Service sector activity in France fell to a 48-month low of 42.7 in February from a final reading of 43.6 in January. Analysts had expected the index to ease up to 44.5.
Oil prices were already lower earlier in the session after Wednesday’s minutes of the Federal Reserve’s most recent meeting indicated that the bank may wind down its bond-buying program sooner than expected.
The minutes of the Fed’s January meeting showed that policymakers discussed the slowing or stopping of bond purchases even before the job market improves, amid concerns that the policy could cause instability in financial markets.
The possibility that the Federal Reserve could end its bond-buying run this year helped buoy the U.S. dollar.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.35% to trade at 81.45, the strongest level since November 16.
Dollar-denominated oil futures contracts tend to fall when the dollar rises, as this makes oil more expensive for buyers in other currencies.
Oil traders now looked ahead to data from the U.S. government on oil and fuel supplies later in the day to gauge the strength of demand from the world’s largest oil consumer.
The report, which comes out a day later than usual due to the President’s Day holiday in the U.S. earlier in the week, was expected to show that U.S. crude oil stockpiles increased by 1.8 million barrels last week, while gasoline inventories were forecast to fall by 0.7 million barrels.
After markets closed Wednesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 2.96 million barrels last week, while gasoline stocks declined 0.12 million barrels.
The U.S. is the world’s biggest oil-consuming country, responsible for almost 22% of global oil demand.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery fell 1% to trade at USD114.42 a barrel, with spread between the Brent and crude contracts standing at USD20.84 a barrel.
