Crude fell sharply on Wednesday, with U.S. oil ending the session barely above $105 as weak Chinese economic data renewed concerns over demand growth from the world's second-biggest oil consumer.
Still, drops in U.S. refined product and crude supplies helped contain losses.
Activity in China's manufacturing sector slowed to an 11-month low in July as new orders faltered, a preliminary survey showed Wednesday, pointing to slower economic growth.
A sub-index of the HSCB/Markit Purchasing Managers' Index, an indicator of Chinese employment based on company surveys, slid to 47.3 in July, the weakest since March 2009. It stood at 47.6 in June and for four months has been below the 50 mark that separates growth from contraction.
"It adds to the concern about the outlook for demand and brings into question just how strong Chinese commodities demand will be," said Alexandra Knight, economist at National Australia Bank.
Brent crude fell by more than a percent, to trade near $107 a barrel, while U.S. light, sweet crude, also known as West Texas intermediate, lost $1.84 to settle at $105.39 a barrel. Brent's premium over WTI was nearly $2, widening after hitting parity for the first time in almost three years on Friday.
Given strong U.S. demand for oil from the Cushing region, "the narrowing of the spread between WTI and Brent looks to continue, [as] the rush of crude oil out of the Midwest is unabated," said John Kilduff, partner at Again Capital.
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Gasoline futures slipped from levels seen Tuesday, losing 0.25 percent, to about $3.05 a gallon.