Oil fell more than 4% to below $73 a barrel, its biggest dive in five months, as weak manufacturing data from China and the US fuelled concerns about faltering economic growth.
US crude fell $3.30 to $72.33 a barrel by 5.29pm, its biggest one-day percentage loss since February 4. London Brent fell $3.09 to $71.92.
The pace of China's manufacturing growth eased in June to the slowest in months as government took steps to cool the property market and curb bank lending.
The Institute for Supply Management said its barometer of US manufacturing activity fell by much more than expected to 56.2.
Oil prices came under pressure yesterday when the government reported a surprise US gasoline stockpiles rise last week. Distillate stocks also rose more than forecast.
Crude stockpiles did fall 2m barrels, more than the expected decline of 900,000 barrels and the government report showed Cushing, Oklahoma, crude stocks shed 795,000 barrels to 36m barrels.
