LONDON (Bloomberg) -- Crude oil fell for a second day on signs that manufacturing in the world’s two biggest energy consumers contracted last month, cutting fuel demand.

Oil declined before an Institute for Supply Management report on Monday that may show manufacturing in the U.S., the world’s biggest consumer of oil, contracted in February. China’s manufacturing shrank for a seventh month. Prices also fell as the dollar rose, reducing the appeal of commodities priced in the U.S. currency.
“There are still demand concerns on the back of the bleak economic outlook,” said Andrey Kryuchenkov, an analyst with VTB Capital in London. “Oil is following equity markets and a stronger dollar is weighing on the price too.”
Crude oil for April delivery fell as much as $1.74, or 3.9 percent, to $43.02 a barrel in electronic trading on the New York Mercantile Exchange. It was at $43.58 a barrel at 10 a.m. London time. Futures have dropped 70 percent from the record $147.27 a barrel reached on July 11.
Brent crude for April settlement declined as much as $1.65, or 3.6 percent, to $44.70 a barrel on London’s ICE Futures Europe exchange. It was at $45.47 a barrel at 10:01 a.m. local time.
The Institute for Supply Management’s factory index fell to 34 in February from 35.6 the prior month, according to the median of analysts’ estimates before a report on Monday. A reading of 50 is the dividing line between growth and contraction.
-----------------Commodity demand falls
Copper also dropped on concern the global recession is deepening, cutting commodity demand. Copper for delivery in three months on the London Metal Exchange fell 1.5 percent to $3,449 a metric ton at 9:03 a.m. London time.
“This negative news on the economic data isn’t going away anytime soon,” said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. “If the U.S. isn’t buying oil, they aren’t buying other things, and that affects the manufacturing numbers here in Asia, which will affect gasoline and fuel oil needs in the region.”
U.S. employers may have cut payrolls by 650,000, the most since 1949, and the jobless rate probably surged to 7.9 percent, according to the median estimates in a Bloomberg News survey ahead of Labor Department figures March 6.
Manufacturing also contracted in China last month. The CLSA China Purchasing Managers’ Index rose to a seasonally adjusted 45.1 from 42.2 in January, CLSA Asia-Pacific Markets said on Monday in an e-mailed statement. A reading below 50 shows a contraction.
---------------OPEC officials
Officials from the Organization of Petroleum Exporting Countries, the supplier of 40 percent of the world’s oil, gave conflicting signals on their intentions to further cut output to bolster prices when they meet in Vienna on March 15.
The group “will likely” reduce supplies to support prices when it gathers, Algerian Oil Minister Chakib Khelil said on Feb. 28 in Algiers. On Sunday, Iran’s oil minister said OPEC is unlikely to lower crude production when it meets.
“I don’t believe we will go toward another production cut,” Gholamhossein Nozari said in comments posted on the Web site of state-run Iranian Students News Agency. “In this meeting we will need to review the economic situation in 2009 and 2010.”
Crude oil, which fell to a five-year low of $33.87 on Dec. 19, has rebounded as OPEC restricted supply. At its last meeting in December, members agreed to a record 9 percent reduction in supply targets effective Jan. 1, extending two earlier resolutions to curb production as the global economy sank into a recession, straining the budgets of crude exporters.
Hedge-fund managers and other large speculators decreased their net-long position in New York crude-oil futures in the week ended Feb. 24, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 28,749 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 16,267 contracts, or 36 percent, from a week earlier.