KUALA LUMPUR, Jan 19 (Reuters) – Oil futures fell by nearly USD 1 on Thursday, extending losses from the previous day, as a surprise jump in US crude stocks weighed on the market along with fears of a recession that were heightened by disappointing US and output data.
Brent crude futures were last down 84 cents, or 1%, to USD 84.14 a barrel at 0710 GMT, after earlier easing to USD 83.76. US West Texas Intermediate (WTI) crude futures also declined 91 cents, or 1.1%, to USD 78.57 a barrel. It earlier fell to a low of USD 78.13.
“The deterioration in US economic data darkened the (oil) demand outlook as recession fears mount again. Risk-off sentiment has sent growth-sensitive commodities down,” said Tina Teng, an analyst at CMC Markets, adding that profit-taking could have played a part also.
US December hilefell by the most in a year, w
recorded its biggest drop in nearly two years, as higher borrowing costs hurt demand for goods.
Still, Federal Reserve officials said interest rates beyond 5% even as inflation shows signs of having peaked and economic activity is slowing.
“This raised the spectre of a recession, with risk appetite suffering as a consequence,” ANZ Research analysts said in a client note.
Adding to the pall, data from the American Petroleum Institute showed U.S. crude oil inventoriesby about 7.6 million barrels in the week ended Jan. 13, according to market sources.
The mean average forecast from a Reuters’ of nine analysts had been for a fall of about 600,000 barrels.
The big build marked the second consecutive week of large inventory increases.
However, distillate stockpiles, which include diesel and heating oil, fell by about 1.8 million barrels against analysts’ expectations for a 120,000-barrel increase.
The API report was delayed by a day due to Monday’s Martin Luther King Day public holiday in the United States. The government’s Energy Information Administration will release its weekly inventory report on Thursday.
With aggressive rate hikes still on the cards, the US dollar climbed, weighing on oil demand as a stronger greenback makes the commodity more expensive for those holding other currencies.
(Reporting by Sonali Paul in Melbourne and Emily Chow in Kuala Lumpur; Editing by Edwina Gibbs, Himani Sarkar and Simon Cameron-Moore)
This article originally appeared on reuters.com