Oil prices dropped on Thursday following weak Chinese economic data and after France said industrialised countries were considering the release of crude stockpiles, analysts said.
Brent North Sea crude for delivery in May shed 34 cents to $123.86 a barrel in London midday deals.
New York's main contract, West Texas Intermediate crude for May, lost $1.03 to $106.24 a barrel.
“Brent has slipped below the $124 a barrel mark, with gloomier economic data from China fuelling concerns about demand in the second-largest oil consumer country,” said Commerzbank analyst Carsten Fritsch.
Chinese manufacturing activity fell to a four-month low in March, HSBC bank said on Thursday, adding fuel to concerns over slowing growth in the world's second largest economy.
HSBC's preliminary PMI fell to 48.1 in March from 49.6 in February, following a sharp slowdown in exports, the banking giant said in a statement. A reading above 50 means expansion, while below 50 suggests contraction.
Analysts said oil prices had also been hit after France said industrialised countries were considering releasing part of their crude stockpiles to counter rising prices.
“The French announcement is definitely having a downside effect on prices,” said Justin Harper, market strategist at IG Markets Singapore.
“It's significant that apart from the US, a major power like France is talking about dipping into emergency stocks,” he told AFP.
“There has been a lot of talk about countries releasing their reserves and traders will be happy when they actually start doing that.”
French energy minister Eric Besson on Wednesday said France and other industrialised countries were considering releasing part of their strategic crude reserves to stave off escalating prices, Dow Jones Newswires reported.
It follows repeated assurances from the world's top crude exporter Saudi Arabia that it would make up for a shortfall in Iranian output as Western sanctions over Tehran's suspected nuclear weapons programme take effect.
The International Energy Agency has estimated that exports from Iran could plunge by about 800,000 barrels per day to one million in the second half of the year. - Sapa-AFP