New York's main contract, West Texas Intermediate light sweet crude for delivery in August, was down 38 cents to $96.18 a barrel and Brent North Sea crude for August shed 44 cents to $101.72 in morning trade.

China's official purchasing managers index came in at 50.1 in June, down from 50.8 in May.

A reading above 50 indicates growth and anything below points to contraction.

"The poorer Chinese PMI data are fuelling concerns about oil demand in China and putting downward pressure on prices," Victor Shum, managing director at IHS Purvin and Gertz in Singapore, told.

"The market sentiment remains bearish as all the recent data out of China point to a slowdown in the Chinese economy," he said.