Oil prices down by 13% over growing US crude inventories

Oil prices fell on Wednesday, pulled down by a report of increased US crude inventories and as a darkening economic outlook stoked expectations of lower fuel demand.

Front-month Brent crude oil futures were at $72.33 per barrel at 0408 GMT, down by 13 cents, or 0.2 per cent, from their last close.

US West Texas Intermediate (WTI) crude futures were down 25 cents, or 0.4 per cent, at $66.79 per barrel. US crude stocks rose by 3.7 million barrels in the week to Aug. 10, to 410.8 million barrels, private industry group the American Petroleum Institute (API) said on Tuesday.

Crude stocks at the Cushing, Oklahoma, and delivery hub rose by 1.6 million barrels, the API said. “Oil prices … fell after the API inventory data showed an unexpected crude build last week,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

Official US fuel inventory data is due to be published later on Wednesday by the Energy Information Administration. Sentiment was also clouded by a darkening economic outlook which could start impacting oil demand, traders said.

The OECD’s composite leading indicator, which covers the western advanced economies plus China, India, Russia, Brazil, Indonesia and South Africa, peaked in January but has since fallen and slipped below trend in May and June.

World trade volume growth also peaked in January at almost 5.7 per cent year-on-year, but nearly halved to less than 3 percent by May, according to the Netherlands Bureau for Economic Policy Analysis.

BMI Research said oil markets would “struggle for direction, as uncertainty around both the impact on supply from the Iranian sanctions and escalating trade tensions between the US and China persists.”