OREANDA-NEWS. May 14, 2013. The technical bottoming pattern that had started to form in the oil complex over the last few trading sessions may run into some difficulty after the latest release of the flash PMI manufacturing data out of China overnight. China's manufacturing-activity growth has slowed this month, according to HSBC data.

The flash version of HSBC's manufacturing Purchasing Managers' Index fell to a two-month low of 50.5 from March's final reading of 51.6, and well below a market consensus forecast of 51.5. New export orders contracted after a temporary rebound in March, suggesting external demand for China's exporters remains weak which should not be a surprise as the economies of its two largest customers… Europe & the US remain sluggish.

The oil complex gained ground across the board on Monday but since the China PMI data has hit the media airwaves during Asian trading hours a negative tone is once again emerging over the complex. Over the last two weeks most of the fundamentals forecasts as well as the majority of the macroeconomic data all have been pointing to a slowing of the global economy and thus a slowing of global oil demand growth.

The weakness in the oil complex continues to come from a growing view that global oil demand may turn out to be lower than what the market was expecting earlier in the year. With supply still relatively robust any further weakening of demand is going to result in an imbalance with inventories likely to build and keep a cap on oil prices. In addition to the negative sentiment coming from the disappointing PMI data out of China the Xinhua News Agency reported that China's commercial stockpiles of crude oil rise by 22 percent at the end of March versus February. This is yet another indication that the consumption in the main oil demand growth area of the world may be showing signs of slowing as much of the data has been suggesting over the last several weeks.

Global equity markets were about unchanged over the last twenty four hours but the momentum may be swinging back toward the negative side since the release of China's PMI data. Ahead of the European trading session China's Shanghai A shares have declined over 2 percent since the PMI data release with Hong Kong falling a tad over 1 percent. The EMI Index gained just 0.9 percent over the last twenty four hours after losing 1.65 percent last week. Five of the ten bourses in the Index remain in negative territory for the year to date with Brazil still showing the largest loss for 2013. On the other side of the equation Japan has been relentless and is now showing a 30.1 percent gain for 2013 as the weak Yen remains the main driver for this export oriented economy. Equities are a neutral to bearish price drive for the oil complex.