Oil prices sank for a sixth straight session today in Asia, tracking a sell-off across equities with an expected pick-up in output adding to worries about the global economy and a weaker-than-forecast fall in US stockpiles.
The Department of Energy said commercial inventories fell by 900,000 barrels in the week ending June 10, far fewer than the 2.33 million predicted in a Bloomberg survey, suggesting demand is easing in the world’s top oil consumer.
The news sent the commodity tumbling and at about 0320 GMT today in Asia US benchmark West Texas Intermediate slipped 46 cents, or 0.96 per cent, to USD 47.55 while Brent shed 34 cents, or 0.69 per cent, to USD 48.63.
After almost doubling between February and last week, WTI has plunged eight percent from an 11-month high, while Brent has lost more than six percent from an eight-month peak.
Supply-side fears have increased, with Canada’s output likely to normalise as wildfires that hit its oil region subside while Nigerian rebels, who have been attacking crude installations, consider peace talks with the government.
“We still, when you think about it, have a surplus of supply because it has really only been disruptions that have seen that surplus disappear,” David Lennox, an analyst at Fat Prophets in Sydney, told Bloomberg News.
He added: “The market is now starting to suggest that once the disruptions are behind us, surplus will re-appear and the rally that we have seen in the prices will evaporate.”
Selling pressure has been inflamed by turmoil on stock markets as traders grow increasingly fearful that Britain will vote next week to leave the European Union, which many warn could precipitate another global rout.
Federal Reserve boss Janet Yellen on Wednesday sounded a warning about the possible impact of a “Leave” vote as the US central bank lowered its economic growth and interest rate projections over the next few years.
A Bank of Japan decision to hold steady on monetary policy despite the weak economy has also added to uncertainty, said CMC Markets analyst Margaret Yang.