The Wall Street Journal reported on Tuesday, September 1st that  weak Chinese economic data helps to pare some of crude’s spectacular gains of recent days
Oil prices retreated Tuesday, giving up some of the strong gains from the last three sessions, as worries about China’s economy resurfaced.
Light, sweet crude for October delivery fell $2.10, or 4.3%, to $47.10 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, declined $2.26, or 4.2%, to $51.89 a barrel on ICE Futures Europe.
Official and private gauges of Chinese manufacturing activity in August slid to multiyear lows, indicating that the country’s sluggish economy continued to contract. This fueled concerns that petroleum demand in China, the No. 2 oil-consuming nation, is set to slow.
“The China PMI numbers today have just reminded people of the China weakness story,” said Julian Jessop, head of commodities research at Capital Economics. But in the oil market, he added, “you have to see the small fall today in the context of the much bigger rises over the previous three days.”
Both oil benchmarks rose more than 25% in the last three days, posting their largest three-day gains on a percentage basis since Iraq invaded Kuwait in 1990.
The rally was helped by a Monday report from the Organization of the Petroleum Exporting Countries that sparked speculation that the organization would consider cutting output to shore up oil prices, as well as downward revisions to U.S. oil-production data.
After the slump at the beginning of last week, Nymex crude prices rebounded sharply to finish up 4.4% in August, while Brent crude gained 3.7%.
Most analysts were unmoved by the OPEC announcement, however. The 12-nation oil cartel has so far refused to slash production in the face of a severe price rout.
“There’s no change in policy whatsoever,” said Amrita Sen, an oil analyst at Energy Aspects.
Despite Tuesday’s weak manufacturing data, some analysts have pointed out that China will still need plenty of oil. The Asian giant’s imports are expected to maintain rapid growth into 2016, driven by strong stockpiling for its emergency reserves and the lifting of import restrictions for some of its refineries, analyst Ivan Szpakowski at Citi Research said in a note.
“Such stockpiling is headed for a record year, and with the further decline in prices over the past two months, China may turn to overseas facilities to boost its stockpiling program,” Mr. Szpakowski said.
Gasoline futures fell 4.9% to $1.4262 a gallon. Diesel futures fell 3.6% to $1.64 a gallon.