(Corrects Friday's price movements for Brent, U.S. oil in
* China manufacturing sector contracts for fourth straight
* Ukraine tension escalates; may affect oil, gas supplies
By Jacob Gronholt-Pedersen
SINGAPORE, May 5 Brent crude slipped towards
$108 a barrel on Monday after fresh data showed China's
manufacturing sector contracted for a fourth consecutive month
in April, while increasing tension in Ukraine prevented further
China's economy continued to lose momentum in April with
HSBC's final PMI reading easing to 48.1, lower than a
preliminary reading but up slightly from an eight-month low in
"Oil is paring back on the back of these numbers and the
trend may continue throughout the afternoon session in Asia,"
said Ben Le Brun, a market analyst with OptionsXpress in Sydney.
Brent crude for June delivery was 13 cents lower at
$108.46 per barrel by 0334 GMT, after settling 83 cents higher.
U.S. oil was 7 cents higher at $99.83, following a rise of 34
cents on Friday.
The disappointing Chinese data came after the U.S. economy
added 288,000 jobs in April, more than expected and the largest
increase since January 2012, which helped lift oil prices on
With Washington in the process of curtailing its massive
monetary stimulus, which has helped support oil prices, the loss
of steam in China's growth engine in the past year has left
investors second guessing about possible stimulus measures from
"Recent comments from the People's Bank of China suggest
that stimulus is not going to be considered at this time, but
down the track if the growth numbers continue to disappoint, we
may see some stimulus measures out of Beijing," said Le Brun.
Brent was supported by increasing tension in Ukraine over
the weekend as violence moved to the western part of the
country, with dozens of pro-Russian activists killed in a blaze
at a building in Odessa they had occupied after clashes with
Pro-Russian militants then stormed a police station in
Odessa on Sunday and freed nearly 70 fellow activists.
Russia has said it would reduce natural gas supplies to
Ukraine in June if no prepayment is received this month, raising
concerns that energy supplies to the European Union could be
A third of the EU's gas demand is met by Russia, with almost
half of that passing through Ukraine. Russia also ships crude
oil through Ukraine to countries in Eastern Europe via the
"It is a concern and it could be a positive for Brent given
the supply chain in Europe," said Le Brun.
Supply from Libya remained limited even after tribesmen
ended their blockade of the El Sharara oilfield as production
cannot resume until a separate protest at a connecting pipeline
is resolved, an oil official said on Sunday.
Iraq's monthly oil exports reached 2.512 million barrels per
day (bpd) in April, rising from 2.139 million bpd in March.
Exports from the south of the country, where the bulk of Iraq's
crude is produced and shipped abroad, reached its highest since
(Reporting By Jacob Gronholt-Pedersen; Editing by Subhranshu