Oil Prices Drop in Asian Trade Amid Concerns Over Weak Demand and Economic Growth
Investing.com-- Oil prices fell in Asian trade on Wednesday after a mixed reading on U.S. inventories, with persistent concerns over slowing economic growth and weak demand keeping prices under pressure. Focus also remained on any new developments in the Israel-Hamas war, with Hamas set to potentially retaliate against Israel over the killing of its leader last week. Fears of a broader conflict in the region offered some support to crude in recent sessions. Brent crude expiring in October fell 0.5% to $76.13 a barrel, while WTI crude fell 0.4% to $75.70 a barrel by 21:12 ET (01:12 GMT).
US Inventories Grow Less Than Expected- API
Data from the American Petroleum Institute (API) showed that U.S. oil inventories grew by 180,000 barrels in the week to August 2, less than expectations for a build of 850,000 barrels. Gasoline stockpiles rose by 3.3 million barrels while distillates grew 1.2 million barrels. The build in product inventories signaled that travel demand was cooling as the summer season came to an end, reversing the trend of strong fuel demand seen earlier in the season. The API data usually heralds a similar reading from the Energy Information Administration (EIA), which is due later on Wednesday.
Demand, Recession Fears Rattle Oil Markets
Oil prices were nursing a slump to near seven-month lows this week amid growing concerns that a U.S. recession will dent oil demand in the coming months. Weak labor data and purchasing managers index readings from the U.S. sparked a rout in most commodity markets. Oil was already grappling with a weak outlook on demand, amid expectations for a market surplus by 2025. The recent OPEC meeting did little to buoy crude, as the cartel signaled no changes to production despite weakness in prices. However, top producers Saudi Arabia and Russia downplayed plans to increase production later this year. Oil was kept above seven-month lows by risk premium in the market, as traders feared that an all-out war in the Middle East could disrupt supplies.
In conclusion, the drop in oil prices due to concerns over weak demand and economic growth, coupled with lower-than-expected U.S. inventories, signals a challenging period ahead for the oil market. Investors and consumers alike should keep an eye on developments in the global economy and geopolitical tensions, as these factors can impact oil prices and ultimately affect their finances.