After falling more than six percent in April, Brent crude oil sagged on Monday and lost some ground as it slipped below $103 on worries about the global economic outlook. The commodity fell to $102.64 at 6:06 GMT on Monday morning following last week's impressive gains.
China will have a large influence on Brent prices this week as new manufacturing data for April will be released. According to Reuters, the oil consuming giant's manufacturing sector is expected to show improvement from March's figures.
However, the HSBC purchasing managers' survey painted a bleak picture for the nation, and caused many to rethink their predictions for a Chinese recovery. The data showed that the Chinese industrial sector shrank and new exports decreased.
Many are blaming Europe for the poor figures, since it is one of China's biggest export markets. The region is stuck in an ongoing financial crisis, which has shown few signs of letting up. On Thursday, the European Central Bank will meet to discuss monetary policy and most are expecting the bank to cut the already record low 0.75 percent interest rate. However, some analysts say a rate cut would do little to help push the eurozone out of recession.
US GDP data also drove Brent prices down after the US Commerce Department reported on Friday that the American economy grew at 2.5 percent, below the forecasted three percent. The data did little to dispel speculation that the US economy is on fragile ground.
The disappointing GDP data coupled with the expectation that unemployment will remain unchanged will probably drive the Federal Reserve to keep its current $85 billion per month bond buying scheme in place.
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