Yemisi Izuora
Oil prices crashed on Wednesday, occasioned by a report of increased U.S. crude inventories and as a darkening economic outlook stoked expectations of lower fuel demand.
Front-month Brent crude oil futures were at $72.14 per barrel down by 32 cents, or 0.4 percent, from their last close, while the U.S. West Texas Intermediate, WTI, crude futures were down 34 cents, or 0.5 percent, at $66.70 per barrel.
U.S. 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, 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.
Sentiment was also clouded by a darkening economic outlook which could start impacting oil demand, traders said.
The Organisation for Economic Co-operation and Development, 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 percent year-on-year, but nearly halved to less than 3 percent by May, according to the Netherlands Bureau for Economic Policy Analysis.