Crude oil futures declined Wednesday as weak manufacturing reports from the U.S. and China raised concerns of a further global slowdown.
Light sweet crude for October delivery declined 0.12 percent or 11 cents to $95.19 a barrel in electronic trading on the New York Mercantile Exchange during the Asian trading hours while Brent crude oil futures for October delivery fell 0.14 percent or 16 cents to $114.02 a barrel on the ICE futures exchange in London.
Oil futures plunged Tuesday after a report showed that U.S. manufacturing activity declined to the lowest level in three years in August. The Institute of Supply Management's (ISM) U.S. Manufacturing Purchasing Managers' Index (PMI) declined to 49.6 in August from 49.8 in July and also fell short of Reuters' expectation of 50.0 reading, fueling concerns that the strength of the economic recovery in the world's largest oil consumer was losing steam.
China's services activity growth declined in August to the slowest pace in a year after the recovery in July, according to the HSBC Purchasing Managers' Index (PMI) released Wednesday. The PMI declined to 52 in August from 53.1 in the previous month, increasing fears of the likelihood of a sharp slowdown in the economy.
Meanwhile, investors opt for caution ahead of the European Central Bank's monetary policy decision Thursday and the U.S. non-farm payroll data Friday, which could swing things the other way again as a big jump in the jobs report could stop the central bank from taking additional measures at its upcoming Fed Open Markets Committee meeting.
Expectations are running extremely high that the ECB will unveil plans to help lower Spanish and Italian bond yields. Recent comments from ECB President Mario Draghi and other governing council members have suggested that interventions will be large enough to reach their objective.
"The market is taking a reality check ahead of the ECB meeting; the expectation is that Draghi won't do anything drastic and what we'll probably get is a lot of jaw-boning. We also have the Fed meeting coming up, so there are a few event risks on the horizon and what we're seeing is some profit-taking ahead of that," Ben Le Brun, a market analyst at OptionsXpress in Sydney, told Reuters.
Light sweet crude for October delivery declined 1.2 percent or $1.17 Tuesday and settled at $95.30 a barrel on the New York Mercantile Exchange. Brent crude oil fell 1.4 percent or $1.60 to settle at $114.41 a barrel.