By Devika Krishna Kumar
NEW YORK (Reuters) - Oil fell up to 5 percent on Monday as weak economic data from China, the world's largest energy consumer, reversed a four-day rally from last week and an OPEC source undermined chances of an emergency meeting to stem the decline.
China's manufacturing sector contracted at the fastest pace since 2012 in January, adding to worries about demand from the world's second-biggest economy at a time when the market is already weighed down by a large supply overhang.
"The weak China PMI (purchasing managers index) is driving down prices because China weighs on the entire commodities sector from the demand side of the equation," said Carsten Fritsch, senior oil analyst at Commerzbank (DE:CBKG) in Frankfurt.
Brent April crude futures (LCOc1) were down $1.39, or 3.9 percent, at $34.60 a barrel by 11:03 a.m. EST (1603 GMT).
U.S. West Texas Intermediate (WTI) (CLc1) fell $1.69, or 5 percent, to $31.93.
A senior OPEC source told a Saudi Arabian newspaper on Monday it was too early to talk about an emergency meeting of the Organization of the Petroleum Exporting Countries.
Oil prices soared last week, with Brent crude surging over 30 percent from the 12-year low touched earlier in the month, after Russian energy officials said they had received proposals from OPEC lynchpin Saudi Arabia on managing output and were ready to talk.
In a sign investors were speculating on an oil rebound, data from the InterContinental Exchange showed net long positions in Brent rose the most in four years last week.
But analysts raised doubts about the possibility of a co-ordinated cutback on production, particularly as OPEC member Iran, which last month was allowed to return fully to markets after years of sanctions, is so far unwilling to participate in cuts.
Iraq, another OPEC member determined to ramp up production, reported rising exports in January, reaching an average of 3.3 million barrels per day, up from 3.2 million bpd the previous month.
"Seems like every time market participants say prices have bottomed, they have been wrong," said Dominick Chirichella, senior partner at Energy Management Institute in New York.
"There's nothing that says prices have bottomed - supply is still greater than demand by a lot, Chinese demand may be slackening, the global economy may be slackening and the likelihood of an OPEC emergency meeting seems very low, as it did last week"