Investing.com — Oil prices slipped lower Wednesday, trading near their weakest levels in more than three months, on concerns over waning demand in the United States and China, the two largest economies in the world.
By 09:20 ET (14.20 GMT), the futures traded 0.8% lower at $76.72 a barrel, while the contract dropped 0.8% to $80.99 a barrel.
Both contracts fell in the previous session to their lowest levels since late July.
U.S. inventories surged last week
Data released Tuesday from the , an industry body, showed that U.S. crude inventories surged almost 12 million barrels last week, much more than expectations for a draw of 300,000 barrels.
The reading indicated that U.S. stockpiles were increasing amid slowing fuel demand, especially as the winter season limits travel, which could result in the overall crude market not being as tight as had been previously predicted.
The API data heralds a similar reading from – the release of which has been postponed until the week of Nov. 13 by the Energy Information Administration.
“The market is clearly less concerned about the potential for Middle Eastern supply disruptions and is instead focused on an easing in the balance,” said analysts at ING, in a note.
Weak Chinese trade data highlight demand concerns
These concerns over U.S. demand followed weak trade data from China, the world’s largest crude importer, earlier in the week.
China’s shrank more than expected in October, while the country’s was at its worst level in 17 months. That said, unexpectedly grew during the month, including crude oil.
“Stronger imports over the course of this year may reflect a recovery in domestic demand, while there will also be a fair amount of stock building,” ING added.
Weak economic readings from Europe– in the eurozone fell by 0.3% on the month in September, an annual drop of 2.9%–also suggested slowing economic growth will weigh on oil demand in this important energy consuming region.
Downside to U.S. crude supply – EIA
There was some good news for crude prices, after the U.S. Energy Information Administration said on Tuesday that crude oil production in the United States this year will rise by slightly less than previously expected.
Additionally, the global economy is set to grow and drive fuel demand, despite macro challenges, according to Haitham Al Ghais, the secretary general of the Organization of Petroleum Exporting Countries.
Powell speech could impact dollar
A sustained rebound in the dollar, from six-week lows, has also weighed on oil markets this week, as a slew of Federal Reserve officials downplayed expectations that the central bank will not raise interest rates further.
Fed Chair is set to speak later in the day, the first of two public appearances this week, and markets will be waiting to see whether Powell provides more clues towards future monetary policy.
A stronger dollar makes commodities, including oil, denominated in the U.S. currency more expensive for foreign buyers.
(Ambar Warrick contributed to this article.)