Oil slides toward $91 a barrel in Europe on slowdown fears
In this Tuesday, March 22, 2012 file photo, a pump jack is silhouetted against the setting sun in Oklahoma City. (AP / Sue Ogrocki)
Published Thursday, September 20, 2012 8:45AM EDT
Oil prices fell closer to $91 a barrel on Thursday, sagging for a fourth straight day as high U.S. inventories and weak economic data from Europe, China and Japan reinforced fears of a deeper global downturn.
By early afternoon in Europe, benchmark oil for October delivery was down 45 cents to $91.53 per barrel in electronic trading on the New York Mercantile Exchange. The contract finished at $91.98 on Wednesday, dropping $3.31, or 3.5 per cent.
In London, Brent crude traded on the ICE Futures exchange was down 54 cents to $107.65 a barrel.
Figures from Europe, Japan and China reminded investors that the world's economy is struggling, though a positive bond auction from Spain helped limit the retreat in markets.
Among the sobering news for investors was a survey in Europe pointing to a deepening recession in Europe, figures from Japan that showed the country's powerhouse export sector was continuing to suffer and a private survey of manufacturers in China that showed activity fell again in September, though at a slightly slower pace than August.
Signs that the global economy is slowing down tend to push oil prices lower because people and businesses use less energy.
"The extended losses are hinting more and more that the bullish impact of (quantitative easing) had already been priced into the market for several weeks and that the focus is now on weaker global economic growth indicators," said analysts at JBC Energy in Vienna.
Separately, crude inventories grew three times more than analysts had expected last week. Crude supplies grew by 8.5 million barrels to 367.6 million barrels. That's 8.4 per cent higher than at the same time last year, according to the Energy Information Administration's weekly report.
Analysts said the uptick in inventory was tied to the return of production by U.S. Gulf Coast refineries after being shut down by Hurricane Isaac.
"We can safely assume that most of this has been on the back of platforms returning to production ... we are seeing the return of the refineries in the Gulf area too," Carl Larry of Oil Outlooks and Opinions said in a newsletter.
Some experts said the large price drop this week was exaggerated and likely to be reversed soon.
Analysts at Commerzbank said they regard "the scale and above all the speed of the price slide as excessive" even if the crude stockpile figures indicate that the market is "amply supplied" at present.
"This is all the more true given that other economic barometers such as equity markets and copper -- a cyclical commodity -- have defended their gains over the same period," they said. "We expect to see a countermovement in the next few days."
In other futures trading in New York, wholesale gasoline was up 2.24 cents at $2.7497 per gallon. Heating oil rose 1.82 cents to $3.0622 per gallon. Natural gas added 2.4 cents to $2.786 per 1,000 cubic feet.