Oil extends losses as economic data, growing inventories drag
Published on 03 Oct 2019. | Source: theedgemarkets.com
SINGAPORE (Oct 3): Oil futures extended losses on Thursday as weak economic data weighed on the outlook for fuel demand which was made worse by a larger than expected rise in U.S. crude inventories.
"Crude oil prices fell as rising inventories added to the weakening economic backdrop," said ANZ Bank in a note on Thursday.
Brent crude oil futures fell 17 cents, or 0.3%, to $57.52 a barrel by 0052 GMT, after tumbling 2% in the previous session.
U.S. West Texas Intermediate (WTI) crude futures fell 9 cents, or 0.2%, to $52.55 a barrel, after sinking by 1.8% on Wednesday.
"What's impossible to ignore is the economic realities being signalled in the latest run of doom and gloom financial market data which offers few if any reason for oil investors to be optimistic over the outlook for global demand," said Stephen Innes, market strategist, SPI Asset Management.
World equity benchmarks hit their lowest levels in a month on Wednesday as signs of a slowdown in U.S. economic growth and weak earnings in Europe fanned fears that the U.S.-China trade war could push the global economy into a recession.
"While the near-term triggers may continue to relate to oil demand, next week U.S.-China trade talks remain the unknown variable which could lend a modicum of support," said Innes.
U.S. crude inventories rose 3.1 million barrels last week, the Energy Information Administration said on Wednesday, far exceeding analyst expectations for an increase of 1.6 million barrels.
WTI futures are on track for eight straight sessions of declines, their longest losing streak since November 2018.
Brent futures are now below levels seen before the Sept. 14 attacks on Saudi Arabia oil facilities that briefly halved more than half the kingdom's output.
"The market is clearly fixated on the potential impact of weak economic growth on oil demand, with supply side issues taking a back seat for the moment," said ANZ. - Reuters
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