The petroleum complex settling lower Monday after a slew of poor macroeconomic data, including contracting manufacturing figures from the US, China and the EU.
NYMEX August crude futures declined $1.21 to settle at $83.75/barrel, after dropping as low as $82.10/b. ICE August Brent settled 46 cents lower at $97.34/b.
Product prices were quite volatile despite the settling lower. NYMEX August RBOB settled 79 points lower at $2.6239/gal, but not before reaching a daily low of $2.57/gal.
August heating oil settled 3.40 cents lower at $2.6759/gal.
Monday's selloff comes after markets posted Friday the fourth largest daily move ever in oil prices, with NYMEX crude gaining more than 9%.
"The weaker tone is certainly understandable, given the latest cycle of global PMI figures pointing to a weaker current economic outlook," said Tim Evans, energy analyst at Citi Futures Perspective, referring to purchasing manufacturing indexes.
According to official Chinese data published Sunday, Chinese PMI fell to a seven-month low of 50.2. However, HSBC/Market Economics data showed Chinese PMI for June was 48.2, which would bring PMI data below 50, indicating contraction in manufacturing. The eurozone PMI remained unchanged from May's 35-month low of 45.1.
Meanwhile, US PMI data was also bearish, with the Institute for Supply Management's key manufacturing index down to 49.7 in June from 53.5 in May.
Despite Friday's rally, market sentiment shows the "euphoria ... has already waned and the primary driver now is the uncertainty of the economy," said Gene McGillian, an analyst and broker at Tradition Energy.
Meanwhile, aggregate European unemployment increased 0.1 percentage points to 11.1% in June, according to Eurostat.
Whether or not the market perceives concrete steps are being taken in the eurozone, supply side risks remain with the ban on Iranian crude imports to Europe and US sanctions taking effect Sunday.
European Union sanctions will "drastically" reduce the market for Iran's oil exports and constrain Tehran's ability to fund illegal proliferation activities, Britain's Foreign & Commonwealth Office said as the EU's embargo on imports of Iranian oil and ban on the provision of insurance for tankers carrying Iranian oil cargoes came into effect on Sunday (See story, 1345 GMT).
The FCO said the EU measures, together with US financial sanctions which took effect last Thursday, had already brought about a 40% drop in Iran's oil exports from 2011 levels.
Meanwhile, members of Iran's parliament have drafted an urgent bill calling for the closure of the strategic Strait of Hormuz to prevent oil tankers from delivering crude oil from the Middle East to countries that have imposed sanctions against Iran, local media reported Monday.
In products, news that the Carlyle Group will form a joint venture with Sunoco to keep that company's 330,000 b/d Philadelphia refinery operating kept downward pressure on NYMEX RBOB and heating oil futures throughout Monday trading (See story, 1606 GMT).
