Oil prices drop on weak Chinese manufacturing data

Oil prices fell Monday as a lower- than-expected Chinese manufacturing activity index overshadowed a pair of generally positive U.S. non-manufacturing activity indices. China's manufacturing activity continued to shrink in April, triggering concerns over demand for oils in the world's second largest economy. The HSBC/Markit China Purchasing Managers' Index stood at 48.1 in April, up from 48.0 in March, but below the dividing line of 50 for the fourth consecutive month. Also adding to downward pressure for the oil market, oil supply in Libya was expected to recover after tribesmen stopped blocking the El Sharara oilfield. However, two separate reports showed that U.S. services activity continued to expand, limiting losses in oil prices. U.S. economic activity in the non-manufacturing sector continued to grow in April, with the index standing at 55.2, higher than March's reading of 53.1, according to the Institute for Supply Management. The number beat market expectations. Meantime, a Markit report said that U.S. robust services activity growth continued in April, with the final seasonally- adjusted index registering 55.0 in April, down slightly from 55.3 in March. The number was modestly shy of market estimates. Light, sweet crude for June delivery decreased 0.28 dollar to settle at 99.48 U.S. dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery shed 0.92 dollar to close at 107.67 dollars a barrel.