Oil falls for 6th day to $62 on economic doubts

LONDON - Oil fell more than $1 to $62 on Wednesday, on course for its sixth consecutive fall and longest losing streak since mid-December, after doubts grew about the strength of the global economy.

By (Reuters)

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Published: Wed 8 Jul 2009, 2:43 PM

Last updated: Thu 2 Apr 2015, 4:42 AM

Figures from the American Petroleum Institute (API) on Tuesday showed distillate stocks jumping by a much higher-than-expected 3.4 million barrels, while gasoline inventories rose 767,000 barrels against a forecast 600,000-barrel build.

Combined with a 1.4 million barrels fall in crude stocks — less than the expected 2.4 million barrels decrease — the oil data show little recovery in demand from the world’s largest oil consumer at a time when talk of “green shoots” has come under renewed scrutiny.

U.S. light crude for August delivery fell $1.06 to a low of $61.87 a barrel before recovering to $62.20 by 0744 GMT, having settled $1.12 lower at 62.93 a barrel on Tuesday, its fifth straight day of losses.

London Brent crude fell 69 cents to $62.55 a barrel.

“The middle distillates numbers are terrible. It is normal that stocks are going up at this time of the year but we are already at record levels,” said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.

“It looks like gasoline demand had started to get better and now suddenly looks bad. It could be for a couple of reasons: it could be a price response or it could just be that the economy is just not out of the woods yet,” he added.


Prices could fall further if the Energy Information Administration, which will release its weekly inventory data at 1430 GMT, shows similarly bleak data.

Oil prices have fallen almost 15 percent from their brief surge above $73 a barrel in late June on worries a rebound in global fuel demand may be far off, after economic optimism helped lift prices from lows under $33 struck in December.

But questions over the pace of economic recovery continue to be raised, with the second-quarter’s rally in energy and equity markets now petering out.

Traders were keeping an eye on the Group of Eight summit in Rome, where some of the leaders of the big Western economies called for reduced volatility in energy markets and said unpredictable prices impaired industry’s ability to invest.

U.S. stocks fell to a 10-week low on Tuesday after a member of the Obama administration’s economic advisory panel said the United States should plan to possibly provide a second round of stimulus funds to prop up the economy.

More bearish data came from Japan, where the value of the country’s core private-sector machinery orders, a leading indicator of capital spending, hit a record low in May, sending the Nikkei average closing down 2.4 percent to a six-week low.

MSCI’s index of Asia-Pacific shares outside Japan dropped 1.6 percent.

European shares fell in early trade, losing ground for the fifth straight session, as investors braced for the start of the corporate earnings season.

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