Oil slides amid weak demand, abundant supply

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Oil prices fell on Thursday, as unseasonably weak demand and plentiful supplies of crude and refined products offset strong Chinese factory data that could boost energy demand in the world's No. 2 oil consumer.

China's factory activity in July posted its fastest expansion in 18 months as new orders surged, a preliminary HSBC survey showed. Europe's demand outlook was dimmer. Due to an influx of oil products from the United States, European refiners have been cutting runs or even idling plants at what should be one of the busiest times of the year.

This has pressured physical crude prices, with West African and North Sea barrels selling slowly even at bargain levels.

"Brent is lower as a function of the fact that we're at peak refinery season and there isn't a lot of demand in the U.S. for Brent quality oil," said Stephen Schork, editor of The Schork Report in Villanova, Pennsylvania.

Brent for September delivery fell by more than $1 to under $107 a barrel, after closing 70 cents higher on Wednesday. U.S. crude dropped 1.05 cents at $102.07 a barrel, after gaining 73 cents in the previous session.

"Brent is in contango, reflecting weak demand from European refiners," said Ole Hansen, senior commodity strategist at Saxo Bank. Contango is a situation in which the price of oil for near-term delivery is cheaper than that for delivery further into the future.

U.S. RBOB gasoline led the complex lower, down 0.94 percent to $2.833. U.S. Labor Department unemployment data on Thursday suggested that the economic recovery remained on track, with initial weekly jobless claims falling to their lowest level since February 2006.

The International Monetary Fund on Thursday chopped its 2014 forecast for global economic growth to take into account weakness early in the year in the United States and China, the world's two biggest oil consumers.

--By Reuters