Investing.com - Crude oil prices dropped sharply in Asia on Monday as markets reflected turmoil in China, with the Shanghai Composite down more than 7%, and overall negative sentiment on demand.
On the New York Mercantile Exchange, crude oil for delivery in October plunged 2.18% to $39.57 a barrel as investors ignored a weaker dollar and focused on oversupply as well as dimemr prospects for the Federal Reserve to raise interest rates in September.
Later on Monday, Federal Reserve Bank of Atlanta President Dennis Lockhart is to speak with his comments to be closely watched.
Last week, crude oil futures tumbled to levels not seen since March 2009 on Friday, as gloomy manufacturing data from China added to concerns over slowing global growth and weak demand prospects.
Data on Friday showed that manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, exacerbating fears over a slowdown in the world’s second-largest economy.
The preliminary reading of the Caixin China manufacturing purchasing managers' index came in at 47.1, down from July's final reading of 47.8. It was the lowest reading since March 2009.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand. Manufacturing numbers are often used as indicators for fuel demand growth.
On the ICE Futures Exchange in London, Brent for October delivery fell to a session low of $45.07 a barrel, the weakest level since March 2009, before closing at $45.46, down $1.16, or 2.49% for the day.
On the week, London-traded Brent futures lost $3.30, or 7.58%, the eighth straight weekly decline, as ongoing concerns over a glut in world markets continued to drive down prices.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production.
Elsewhere, West Texas Intermediate oil futures sank below the $40-level for the first time in more than six years amid indications that U.S. drilling activity could rebound in the months ahead and add to a supply glut.
Industry research group Baker Hughes (NYSE:NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. increased by two last week to 674, the fifth straight weekly gain.