Oil prices fell on Wednesday as new US business surveys pointed to worsening conditions in the world’s biggest economy and worries persisted about China’s battle to combat coronavirus flare-ups.
Brent crude, the international benchmark, slipped 3.9 per cent at $84.91, while US marker West Texas Intermediate lost 4 per cent at $77.76.
The fresh falls came as concerns about global demand were highlighted by a disappointing US purchasing managers’ report. The S&P Global US composite PMI for November, which takes into account the services and factory sectors, reached a three-month low of 46.3, suggesting the pace at which business conditions are deteriorating is worsening.
“Business conditions across the US worsened in November . . . with output and demand falling at increased rates, consistent with the economy contracting at an annualised rate of 1 per cent,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
PMI reports for the euro area also pointed to a continued slowdown in business activity. “The [eurozone] data suggests the outlook has marginally improved and some tail risks are less likely, but is still consistent with a meaningful recession,” Barclays said in a note to clients.
The reports come as analysts remain concerned about China, which is launching large-scale lockdowns as it battles Covid outbreaks.
US government bonds gained in price as traders dipped into haven assets. The 10-year yield fell 0.04 percentage points to 3.72 per cent, while the two-year slipped by the same margin to 4.48 per cent.