Oil prices retreat on concerns over China's economy

Oil prices dropped Friday as worse-than-expected Chinese manufacturing data sparked concerns over the slowdown of its economy growth. The manufacturing operating conditions of China, a major energy consumer, deteriorated in July at the quickest pace since last August. The preliminary purchasing managers' index (PMI) of China dropped to 47.7 in July, down from a final 48.2 in June and the lowest in 11 months, an HSBC report showed Wednesday. A PMI reading above 50 indicates growth, while a reading below 50 indicates contraction. On Thursday, China announced plans to cut excess production capacity in 19 industries this year, which involved steel, electrolytic aluminum, cement, copper smelting and paper industries. Investors worried that its economic restructuring measure would reduce fuel consumption in the future. U.S. economic data came in generally positive. The U.S. consumer sentiment index for July rose to 85.1, the highest level in six years, according to the final reading of a joint report released by Thomson Reuters and University of Michigan on Friday. Light, sweet crude for September delivery lost 79 cents, to settle at 104.7 dollars a barrel on the New York Mercantile Exchange. Brent for September delivery went down 48 cents, to close at 107.17 dollars a barrel.