Investing.com - Crude prices recovered about 1% in Asia on Thursday despite a weaker than expected reading in a private manufacturing PMI that showed a drop into contraction in May.
On the New York Mercantile Exchange crude futures for July delivery rose 0.99% to settle at $48.80 a barrel, while on London's Intercontinental Exchange, Brent was gained 0.91% at $51.22 a barrel.
China's Caixin manufacturing PMI for May came in at 49.6, marking an 11-month low and slipping into contraction as it missed a level of 50.1 seen.
"China's manufacturing sector has come under greater pressure in May and the economy is clearly on a downward trajectory," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note accompanying the Caixin survey.
Demand faltered in May as total new orders fell to 50.3 - the lowest level in 11 months - from the previous month's 51.0. The rate of expansion in new export orders also weakened significantly, showing only marginal growth.
Overnight, China reported official manufacturing PMI for May at 51.2, compared with a level of 51.0 seen, and steady with 51.2 in April. The non-manufacturing PMI came in at 54.5, up from a level last at 54.0 in April. A figure above 50 denotes expansion.
U.S. crude oil inventories dropped 8.670 million barrels at the end of last week, the American Petroleum Institute said on Wednesday, far more than expected as gasoline supplies eased 1.726 million barrels and distillates fell 124,000 barrels.
Forecasts saw a crude oil inventory fall of 2.517 million barrels and a drop of 1.091 million barrels for gasoline stocks and a fall of 755,000 barrels for distillates.
Supplies at the Cushing, Oklahoma, oil hub dipped by 753,000 barrels.
The API estimates will be followed on Thursday with official data from the Energy Information Administration. The two sets of figures often diverge.
Overnight, crude futures settled more than 2% lower on Wednesday, as investors shrugged of a renewed pledge from Saudi Arabia and Russia to reduce the glut in supply.
Oil prices fell as investors ignored Saudi and Russian Energy ministers’ comments on reducing global inventories, as concerns grew that oil producers that are not part of the global pact to reduce supply would continue to ramp-up production, undermining Opec and its allies’ efforts to curb the glut in supply.
At a meeting with his Russian counterpart Alexander Novak, Saudi Energy Minister Khalid al-Falih said on Wednesday “more needed to be done to draw inventories towards the five-year average”.
Novak added that a new framework “for continued steady cooperation between OPEC and non-OPEC” was necessary even after the expiration of the Vienna agreements.
OPEC and non-OPEC members agreed to extend production cuts for a period of nine months until March last week, but stuck to production cuts of 1.8 million bpd agreed in November last year, against expectations that the oil cartel was set to announce deeper production cuts.
Goldman Sachs (NYSE:GS) earlier this week downgraded its forecasts for oil prices this year, targeting an average of $55.29 per barrel for Brent, down from its previous forecast of $56.76 a barrel while lowering its expectations WTI to $52.92 per barrel from $54.80.