Oil Prices Slip as China, Higher Supply Weigh

Oil fell below $107 a barrel on Thursday to its lowest in more than three weeks following lacklustre Chinese economic data, the prospect of a rise in Libyan oil supply and record-high U.S. inventories.
 

China's Purchasing Managers' Index rose marginally in April, but export orders fell, which strengthened concerns that economic growth may continue to slow in the world's second-largest oil consumer after a slowdown in the first quarter.
 

"Brent is breaking downwards, and the trigger seems to have been the poor data out of China and very high crude stocks in the States," said Christopher Bellew, a broker at Jefferies Bache in London.
 

"The only thing stopping the market falling further is geopolitical factors, such as Ukraine."
 

Brent crude was down 98 cents at $107.09 a barrel by 1351 GMT and slipped to as low as $106.85 intraday, the weakest since April 8. U.S. crude dropped 48 cents to $99.26.
 

The imminent restart of an oil port in eastern Libya also pressured Brent. Zueitina will load its first tanker on May 1-3, after being closed for nearly 10 months due to protests, trading and shipping sources said.
 

Protests and strikes are still keeping Libya's output at a fraction of its potential. Analysts do not expect a rapid recovery after previous agreements for Libyan ports to reopen and supplies to resume have failed to be implemented.
 

Also pressuring prices, U.S. crude inventories rose last week to a record, a report from the government's Energy Information Administration showed on Wednesday.
 

Inventories were at just under 400 million barrels, the largest since 1982, when the EIA began its surveys. The increase pressured U.S. crude, widening its discount to Brent <CL-LCO1=R> to more than $8.
 

U.S. data showed an unexpected rise in the number of people filing new claims for unemployment benefits last week, but the underlying trend continued to point to improving conditions in the U.S. labour market.
 

Investors on Wednesday shrugged off the U.S. Federal Reserve's announcement that it would cut its bond purchases by another $10 billion.

(By Alex Lawler, Reporting by Alex Lawler and Florence Tan; Editing by Dale Hudson and Jane Baird)