Oil prices slide on weak demand
LONDON: Oil prices fell further on Thursday, one day after the US reported an unexpected jump in American crude reserves that signalled flagging demand in the world's number one energy consumer.
New York's main futures contract, light sweet crude for October delivery, dropped 1.06 dollars to 70.37 dollars a barrel.
Brent North Sea crude for October was down 62 cents to 71.03 dollars in late London trade.
"Oil prices have found a new trading range in the low 70s in August," said Torbjorn Kjus, oil market analyst at DnB NOR Markets, on Thursday.
"It is not difficult to argue that oil prices could move upwards to test 80 dollars a barrel in the coming weeks, mainly based on positive macro-economic indicators.
"We do however still believe that within the coming months we will see significantly lower prices, as (supply and demand) fundamentals between the crude producers and the refiners deteriorate."
The US Department of Energy (DoE) announced Wednesday that American crude stockpiles rose 200,000 barrels to 343.8 million in the week ending August 21, against expectations for a weekly drop of 600,000 barrels.
"Inventories have increased... that's obviously surprised markets a little bit," said Ben Westmore, minerals and energy economist for the National Australia Bank.
"It doesn't look like the supply and demand balance in the US is improving... it doesn't really look like the massive supply overhang in the US will be resolved just yet," he said.
A forecast by the AAA motorist group that Americans would slash their early September Labor Day holiday travel plans as they tighten their belts was also weighing on crude prices, analysts said.
Some 39.1 million travellers were expected to take to the roads and air during the end-of-summer holiday, down a record 13.3 percent from a year ago, the AAA survey showed.
On Tuesday, New York crude had hit a 10-month high of 75 dollars following strong US consumer confidence data, before plunging on profit-taking.
"It seems that most markets are floundering here, as investors are perhaps taking some money off the table after weeks of steady gains," said MF Global analyst Ed Meir.
"These corrections are both normal and healthy, and we could even see further weakness in energy before the current selling runs its course.
"However in our view, the 'recovery trade' still seems to be intact and should reinvigorate the markets, particularly if US macro data continues to reflect the types of numbers that now seem to be surprising more consistently to the upside," he added.