Oil prices slide in volatile trading

Oil prices slide in volatile trading Updated: Tuesday, August 2, 2011    -    News Source: AFP

Crude prices slumped in late London trade after an early rally, as traders reacted to major economic developments in the United States, the world's biggest consumer of oil.

Brent North Sea crude for delivery in September shed $1.45 to $115.29 a barrel in late London deals after earlier rising by more than two dollars.

New York's main contract, light sweet crude for September, dropped $1.78 to $93.92 after jumping more than a dollar.

Prices had initially rallied after US President Barack Obama on Sunday announced an 11th-hour deal to avert a potentially catastrophic debt default for the United States.

But they reversed direction as data showed the US manufacturing sector stalled in July.

The Institute of Supply Management's indexed survey of purchasing managers was at 50.9, down from 55.3 the previous month. A reading above 50 indicates expansion, ISM said.

But new orders fell to 49.2 on the index, implying a contraction.

On Friday the United States said its economy grew at a dead-pace 0.4 percent in the first quarter and only 1.3 percent in the second quarter of 2011.

"Crude oil prices rebounded along with equities" in early trade, "however this afternoon's ISM saw those gains pared back," said Michael Hewson, an analyst at trading group CMC Markets.