Oil Futures Settle Sharply Lower On Demand Concerns
Despite data showing a big drop in U.S. crude inventories in the week ended August 11, oil prices drifted lower on Wednesday amid worries about the outlook for energy demand from China.
Oil prices were also weighed down by uncertainty over the future course of interest rates and the prospect of a possible downgrade of several U.S. lenders by Fitch Ratings.
West Texas Intermediate Crude oil futures for September ended down $1.61 or about 2% at $79.38 a barrel.
Brent crude futures were down $1.62 or 1.9% at $83.27 a barrel a little while ago.
Data released by the Energy Information Administration (EIA) this morning showed crude stockpiles fell by 5.960 million barrels in the week ended August 11, as against expectations for a decline of about 2.3 million barrels.
Gasoline inventory dropped by 0.261 million barrels last week, much less than an expected drop of 1.26 million barrels.
Meanwhile, distillate stockpiles were up 0.296 million barrels last week, as against forecast for a drw of 0.473 million barrels.
Data from the American Petroleum Institute showed that U.S. oil stockpiles fell by about 6.2 million barrels last week, exceeding forecasts of a 2.3 million-barrel drop.
Edward Moya, Senior Market Analyst at OANDA, says crude looks like it is ready to consolidate at these levels.
“Oil is also battling a strong dollar, which looks like it might not be done strengthening unless we get some action from China and Japan. The U.S. manufacturing outlook is still downbeat despite [being] boosted by rising auto production,” adds Moya.
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