Oil prices fall below $107 a barrel

Oil prices dip on concerns about China's growth. But oil prices are up from $75 a barrel in October.

Enrique Marcarian/Reuters/File
A worker maneuvers a drill bit at a gas and oil drilling rig in the Patagonian province of Neuquen this past October. Oil prices dipped below $107 a barrel, continuing in the tight range of $105 to $110 in the past month.

Oil prices fell below $107 a barrel Thursday in Asia after weak manufacturing data suggested China's economy, and demand for crude, could grow less than expected this year.

Benchmark oil for May delivery was down 55 cents to $106.72 at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.20 to settle at $107.27 per barrel in New York on Wednesday.

Brent crude for May delivery was down 63 cents at $123.57 per barrel in London.

Chinese industrial production fell to a four-month low in March, according to HSBC's preliminary manufacturing index released Thursday. China is the world's second biggest consumer of oil behind the U.S.

"Weakening domestic demand continued to weigh on growth," HSBC said in a report. "China's slow down has yet to finish."

Crude has hovered between $105 and $110 for the last month, up from $75 in October, amid the possibility that a military strike by Israel or the U.S. on Iran's nuclear facilities could disrupt global supplies.

The jump in oil prices in recent months has increased the price of gasoline and other crude products and raised fears in Asia that inflation could quicken. Inflation concerns have kept policymakers from implementing aggressive stimulus measures despite signs of slowing economic growth, said Irvin Seah, an economist with DBS bank in Singapore.

"Oil prices will hit everyone, which is why despite the downside risks to growth, Asian central banks have been standing back rather than cutting interest rates," Seah said.

In other energy trading, heating oil was down 0.1 cent at $3.23 per gallon and gasoline futures slid 0.5 cent at $3.34 per gallon. Natural gas fell 2.1 cents at $2.34 per 1,000 cubic feet.

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