Following a larger that expected build in weekly crude stockpiles in the US, and with signs pointing to a weakening demand in China, oil prices extended their losses into Asian trading on Thursday.
In the prior session, crude had fallen about 1.5%, which ended a brief recovery, after incoming data indicated US inventories and production were increasing.
Adding to oil’s woes, data coming in from China showed that in October, Chinese refiners processed less oil than in the previous month, indicating diminishing demand. However there was other data pointing to continued economic strength of the largest importer of crude in the world, specifically an industrial production reading which came in bigger than expected.
However in spite of that, Wednesday saw oil mostly reverse the gains of earlier in the week, as traders soured on demand regardless of optimistic predictions from the International Energy Agency and the Organization of Petroleum Exporting Countries.
Crude demand was also hit by weak GDP readings coming out of Japan and the Eurozone, as economic fundamentals worsened across the world.
Brent oil futures were down 0.5% to $80.11 per barrel, as West Texas Intermediate crude futures dropped 0.7% to $76.11 a barrel by 20:41 ET (01:41 GMT). Both contracts were down 1% for the week, and were on track for their fourth week in a row of losses.
Oil prices have been declining for the past three weeks as the risks from the Israel-Hamas war appeared to abate, and a raft of weak economic numbers came in from China, indicating demand there may be slipping.
In the US, government data indicated that inventories increased by 3.6 million barrels in the week to November 10, beating expectations for an almost 1.8 million barrel build.
US production, meanwhile, continued to remain at record highs, with nearly 3.2 million barrels being produced per day through the week, pointing to a continuing healthy supply.
US demand held steady, as data showed outsized draws on gasoline and distillate inventories throughout the week. However in recent weeks, the pace of the draws has been declining steadily, and demand has naturally eased with the onset of winter’s slower driving season.
In addition, although recent data points to inflation declining, concern remains over warnings from the US Federal Reserve that it could still hike interest rates further this year, impacting the economy and hitting demand, as the dollar benefits from such uncertainty, which in turn, drives oil prices downward.
