Oil prices continued to track lower on Thursday, after falling more than 3 per cent on Wednesday after a surprise jump in US stockpiles.
Oil bears who have been grumbling that US demand remains weak and that crude prices have run too far, too fast were given ammunition. Data showed US crude stocks up 2.8m barrels last week, confounding the consensus forecast for a drop of 1.5m barrels.
The increase in crude stocks was due partly to a rise in imports, up 891,000 barrels a day to 9.41m b/d last week. However, refineries also reduced activity with refinery utilisation down 1.3 percentage points to 85.6 per cent.
Petrol inventories jumped 5.4m barrels, far above the consensus forecast for an increase of 400,000 barrels.
After falling by 3.6 per cent on Wednesday, Nymex West Texas Intermediate fell a further 0.7 per cent or 52 cents a barrel to $68.45 a barrel. Brent crude lost 41 cents to €67.58 a barrel. RBOB gasoline was down by 1 per cent to $1.69 a gallon.
”We have to assume that investors are not that impressed by the total product and gasoline demand increases, perhaps suspecting that much of this bump is due to easy comparisons against a sluggish offtake period evident at this time last year,” said Edward Meir at MF Global.
The Baltic Dry index, the benchmark measure for freight costs of metalic ores, coal and grains, fell for a 10th-consecutive session on Thursday, reflecting concerns that commodity demand is weakening.
”The index has nearly halved since the beginning of June,” said James Lord at Barclays Capital. ”To some extent, the slide is due to an increase in shipping capacity. But we believe it primarily reflects waning demand for commodities – especially in China.”
Elsewhere, base metals were lower on the London Metal Exchange, with copper down 1.3 per cent to $6,090.50 a tonne, while lead fell 1.5 per cent to $2,218 a tonne and tin lost 1 per cent to $14,500 a tonne.
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