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Brent crude futures for August delivery were down $1.29, or
1.75%, to $72.42 a barrel at 1013 GMT. U.S. West Texas
Intermediate crude (WTI) fell $1.28, or 1.84%, to $68.18.
Both benchmarks fell by more than 4% on Tuesday.
Brent's July contract, which expires on Wednesday, and the U.S.
benchmark were on track for monthly declines of more than 9% and
11%, respectively.
China's manufacturing activity contracted faster than expected
in May on weakening demand, with the official manufacturing
purchasing managers' index (PMI) down to 48.8 from 49.2 in
April. The outcome lagged a forecast of 49.4.
Further pressure came as the U.S. dollar rose to its highest in
over two months, making commodities more expensive for buyers
holding other currencies and weighing on oil demand.
The U.S. dollar index, which measures the greenback against six
major peers, saw support from cooling European inflation and
progress on the U.S. debt ceiling standoff, which will advance
to the House of Representatives for debate on Wednesday.
The dollar could add to recent gains if Friday's U.S. May
non-farm payrolls number is stronger than expected and raises
the probability of the Federal Reserve raising rates again in
June.
Market players are preparing for the upcoming June 4 meeting of
OPEC+ - the Organization of the Petroleum Exporting Countries
and allies including Russia.
Mixed signals by major OPEC+ producers on whether or not the
group will decide to further cut oil production have sparked
recent volatility in oil prices.
Despite the latest pullback in prices, the outlook for oil
market fundamentals remains tight, said PVM oil market analyst
Stephen Brennock.
"The most likely action is inaction," Brennock said, regarding
the OPEC+ decision.
Separately, U.S. crude oil and gasoline stockpiles were seen
falling last week, while distillate inventories likely
increased, a preliminary Reuters poll showed on Tuesday. [EIA/S]
The poll was conducted ahead of reports from the American
Petroleum Institute, an industry group, due at 4:30 p.m. EDT
(2030 GMT) on Wednesday.
(Reporting by Rowena Edwards in London; Additional reporting by
Trixie Yap in Singapore, Stephanie Kelly in New York, and Yuka
Obayashi in Tokyo; Editing by Mark Potter)
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