Investing.com - Crude oil prices held weaker in Asia on Monday on dimmed hopes for demand-led growth as China showed manufacturing remains in contraction.
On the New York Mercantile Exchange, crude oil for delivery in March dropped 1.34% to $33.13 a barrel. Brent fell 1.65% to $35.38 a barrel.
In China the semi-official manufacturing PMI for January reached 49.4, missing the 49.6 level seen and remaining in contraction and the Caixin Manufacturing PMI index came in at 48.4, a bit above the expected 48.0. As well, Japan reported its manufacturing PMI came in at 52.3, compared to a 52.4 level seen. The non-manufacturing PMI in China hit 53.5, down from 54.4 the previous month.
Figures above 50 suggest expansion and those below contraction.
"The upshot is that economic momentum may have deteriorated last month. That said, we can’t be certain yet," Capital Economics said in a note to clients after the data. "The PMIs provide and early hint of how the economy is performing but we don’t recommend putting too much weight on them. The official manufacturing PMI, in particular, appears to have been a poor gauge of economic activity over the past year."
Earlier, the AIG Manufacturing index in Australia for January came in at 51.5 with last month's reading at 51.9. As well, the MI Inflation Gauge is due for a month-on-month estimate.
In the week ahead, investors will be awaiting a flurry of survey data on manufacturing and service sector growth amid concerns over the outlook for the global economy.
Last week, oil prices rallied for the fourth straight session on Friday, amid speculation OPEC and non-OPEC producers may be edging closer to a deal to cut production in an effort to tackle one of the biggest supply gluts in decades.
On the ICE Futures Exchange in London, Brent oil for April delivery surged $1.19, or 3.42%, on Friday to close the week at $35.99 a barrel.
A day earlier, prices climbed 87 cents, or 2.56%, after Russian energy minister Alexander Novak said Saudi Arabia proposed to cut oil production by each country by up to 5%.
On the week, London-traded Brent futures jumped $3.81, or 10.58%, the second consecutive weekly gain. Brent prices are up nearly $9.00, or 25%, since falling to a 12-year low of $27.10 on January 20.
Despite recent gains, Brent ended January with a loss of 3.7% amid ongoing concerns over a global supply glut.
Global crude production is outpacing demand following a boom in U.S. shale oil and after a decision by the Organization of the Petroleum Exporting Countries last year not to cut production in order to defend market share. Oversupply issue will be exacerbated further as Iran returns to the global oil market in the coming months.