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Weak China hammers oil prices

IMF expects Chinese economy to slow by nearly a full percentage point.

By Daniel J. Graeber
Chinese economic slowdown sends crude oil prices searching for new lows in early Friday trading. File photo by Stephen Shaver/UPI | <a href="/News_Photos/lp/78bbae1a211d1196072257cee0be8662/" target="_blank">License Photo</a>
Chinese economic slowdown sends crude oil prices searching for new lows in early Friday trading. File photo by Stephen Shaver/UPI | License Photo

NEW YORK, Aug. 21 (UPI) -- Weak Chinese manufacturing data released after a down day in U.S. markets sent crude oil prices down more than 1 percent in early Friday trading.

Brent crude oil prices were down nearly 2 percent from the previous close to $45.72 per barrel. West Texas Intermediate, the U.S. benchmark for crude oil prices, continued searching for a new bottom, dropping 1.5 percent from Thursday to trade at $40.66 per barrel.

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Crude oil markets are in the midst of one of the worst sessions in years amid ongoing fears of a slowdown in China, one of the world's leading economies.

Chinese decisions to devalue the national currency and inject billions of dollars into the market have done little to allay investor concerns. The Shanghai Composite Index closed down 4.27 percent Friday and, with a 6 percent drop this week, is off more than 11 percent from last week.

A flash estimate of the Caixin China Manufacturing Purchasing Managers' Index reported a contraction to 47.1 in August, down from the 47.8 reported in July. That's the lowest PMI, a gauge of the strength of the manufacturing sector, since March 2009.

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The International Monetary Fund reported last week it expected the Chinese economy to grow at a rate of 6.8 percent for the year, down from the 7.4 percent reported in 2014.

U.S. markets tumbled Thursday on concerns of Asian economic resiliency. The Dow Jones Industrial Average fell 2.1 percent to its lowest level since October. Dow futures point to a down day for trading when markets open Friday.

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