Investing.com - Oil prices slumped on Friday as a contraction in the euro zone’s manufacturing sector, led by Germany, stoked fears about the global economic slowdown and its potentially negative impact on demand for fuel.
New York-traded West Texas Intermediate crude futures lost $1.17, or 2.0%, at $58.81 a barrel by 10:18 AM ET (14:18 GMT). It bottomed at $58.68 before recovering slightly.
Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., traded down $1.16, or 1.7%, to $66.70.
Led by slumps in manufacturing activity in Germany and France, the region’s two largest economies, IHS Markit's composite purchasing managers’ index data for the euro zone implied that growth would be a meager 0.2% in the first quarter.
“Today's economic numbers indicate the strong relationship that China has with Europe. China has been slowing down, especially in ordering industrial products and automobiles, and that is going to hit Germany out-proportionally,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.
Although U.S. President Donald Trump said trade negotiations with China were progressing and a final agreement "will probably happen," he had indicated that tariffs on Chinese exports would remain in place until he was satisfied of Beijing’s compliance with any eventual deal.
The trade dispute runs the risk of further exacerbating the slowdown already in process in the world’s two largest economies, potentially decreasing demand for oil.
Despite Friday’s slump, U.S. crude is still on track for its third straight weekly gain, in a week where it briefly passed the $60 mark for the first time this year.
The commitment from OPEC and its allies to reduce the global supply cut starting in January has driven prices more than 30% higher so far this year.
In other energy trading, gasoline futures fell 0.9% to $1.9031 a gallon by 10:20 AM ET (14:20 GMT), while heating oil lost 1.7% to $1.9540 a gallon.
Lastly, natural gas futures traded down 1.7% to $2.772 per million British thermal unit.
-- Reuters contributed to this report.