Oil prices fall on weak economic data, interest rate worry

Brent crude oil price news: Oil prices slipped in early Asian trade on Thursday as weak manufacturing data in major economies outweighed optimism around a larger-than-expected drop in U.S. crude stocks. Markets are also looking for hints on the outlook for how long interest rates will remain at current levels ahead of a speech by Federal Reserve Chair Jerome Powell at a central bank symposium in Jackson Hole, Wyoming, starting on Thursday.

Brent crude fell 27 cents, or 0.3 per cent, to $82.94 a barrel by 0002 GMT, while U.S. West Texas Intermediate crude dropped 31 cents, or 0.4 per cent, to $78.58. a barrel. Manufacturing data from a host of purchasing managers' index (PMI) surveys on Wednesday painted a grim picture of the health of economies across the globe, raising demand concerns. Japan reported shrinking factory activity for a third straight month in August. Euro zone business activity also declined more than expected, particularly in Germany. Britain's economy looked set to shrink in the current quarter, in danger of falling into recession.

U.S. business activity approached the stagnation point in August, with growth at its weakest since February. Meanwhile, Federal Reserve officials and policymakers from the European Central Bank, the Bank of England and the Bank of Japan head to Jackson Hole where higher-for-longer interest rate talk may dominate despite a dip in inflationary pressures. On the supply side, Iran's crude oil output will reach 3.4 million barrels per day (bpd) by the end of September, the country's oil minister was quoted as saying by state media, even though U.S. sanctions remain in place.

U.S. officials are also drafting a proposal that would ease sanctions on Venezuela's oil sector, allowing more companies and countries to import its crude oil, if the South American nation moves toward a free and fair presidential election, according to five people with knowledge of the plans. U.S. crude inventories (USOILC=ECI) fell by 6.1 million barrels in the week to Aug. 18 to 433.5 million barrels, compared with analysts' expectations in a Reuters poll for a 2.8 million-barrel drop.