Investing.com– Oil prices fell in Asian trade on Thursday, extending losses after a substantially bigger-than-expected build in U.S. inventories pointed to well-supplied markets, while Japanese recession signals drove up concerns over slowing demand.
Crude prices had lost over $1 each on Wednesday after data showed U.S. grew a staggering 12 million barrels in the week to February 9, much higher than expectations for a build of 3.3 million barrels.
The reading was driven chiefly by record-high U.S. production, indicating that the world’s largest fuel consumer remained well-supplied with oil.
While gasoline and distillate inventories shrank, the drop was attributed largely to extended refinery shutdowns, due to maintenance activity. U.S. fuel demand was seen weakening in recent months amid adverse weather and increasing economic pressure from high inflation and interest rates.
expiring in April sank 0.4% to $81.26 a barrel, while fell 0.4% to $76.03 a barrel by 20:53 ET (01:53 GMT).
Weak economic data fuels demand concerns
(GDP) data from Japan showed the country unexpectedly entered a technical recession in the fourth quarter, amid persistent weakness in private consumption.
The reading was preceded by fourth-quarter data on Wednesday, which showed economic activity in the bloc changed little after also entering a recession in the third quarter.
The weak economic readings, coupled with recent indicators that U.S. interest rates will remain higher for longer in 2024, factored into concerns that cooling economic activity will keep oil demand subdued in the coming months.
A strong also weighed on crude, with the greenback trading near three-month highs after data showed U.S. inflation remained sticky in January, giving the Federal Reserve more impetus to keep rates higher for longer.
The International Energy Agency is set to release a later on Thursday, which comes just days after the Organization of Petroleum Exporting Countries left its outlook for global crude demand unchanged in a .
Still, oil prices were sitting on some gains over the past two weeks, aided chiefly by persistent concerns over supply disruptions in the Middle East, after an Israel-Hamas ceasefire fell through.
A recent Reuters report also showed that moves by China, the U.S. and the euro zone to replenish depleted sovereign reserves could provide oil prices with some support in the coming months.
An scheduled for March is now in focus, particularly to gauge whether the cartel will maintain its production cuts in the near-term.
Read the full article here
