Oil prices extend losses on US inventory shock, demand concerns
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. oil inventories 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.
Brent oil futures expiring in April sank 0.4% to $81.26 a barrel, while West Texas Intermediate crude futures fell 0.4% to $76.03 a barrel by 20:53 ET (01:53 GMT).
Gross domestic product (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 euro zone GDP 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 dollar also weighed on crude, with the greenback trading near
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