BANGKOK – The price of oil fell below $93 a barrel Tuesday as traders scaled back their optimism about the U.S. economy following a report that showed shrinking factory activity.
Benchmark oil for July delivery fell 57 cents to $92.88 a barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose $1.48 to close at $93.45 a barrel on the Nymex on Monday.
Data showing that manufacturing activity in the U.S. slowed in the month of May boosted energy markets Monday. Traders believe the weaker the economy, the less likely it is for the U.S. Federal Reserve to pull back on its monetary stimulus measures.
The Institute for Supply Management said Monday that its index of manufacturing activity fell to 49 last month from 50.7 in April. Readings below 50 indicate a contraction.
But analysts at DBS Bank Ltd. in Singapore said the data was worrisome because it reflected a trend, not a one-time event, since the reading has dropped every month since February.
"The ISM dropped to 49 in May. That's not weak, that's negative. Below zero. Under water ... best not to look for a rebound next month," DBS said in a market commentary.
Brent crude, a benchmark for many international oil varieties, fell 22 cents to $101.84 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the New York Mercantile Exchange:
— Wholesale gasoline added 0.2 cents to $2.7868 a gallon.
— Heating oil fell 0.5 cent to $2.8283 per gallon.
— Natural gas fell 1.8 cent to $3.973 per 1,000 cubic feet.