Oil Prices Slide To One-month Low As U.S. Data Feeds Fuel Demand Worry

NEW YORK: Oil prices tumbled on Thursday to their lowest point since early August as Wall Street sold off following U.S. unemployment data that fed fears of a slow recovery for the economy and fuel demand a day after weak U.S. gasoline demand data.

Brent crude fell $1.14, or 2.6%, to $43.29 a barrel by 11:21 EDT U.S. West Texas Intermediate (WTI) crude futures were down $1.02, or 2.5%, at $40.49 a barrel.

U.S. stock prices sank as investors sold high-flying tech stocks and worried about economic recovery after Labor Department data showed the number of Americans filing new claims for unemployment reached a seasonally adjusted 881,000 for the latest week. Continuing claims remained high, with millions out of work.

The Dow tumbled 700 points and the Nasdaq pulled back by nearly 5%.

A day earlier both oil benchmarks fell more than 2% after U.S. Energy Information Administration (EIA) data showed domestic gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier. Consumption of other oil products also fell.

“The market failed to react positively to the drawdown in inventories and then threw in the towel for the Labor Day weekend,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Analysts warn that upcoming refinery maintenance and the end of the summer driving season could also limit crude demand.

WTI crude has come under pressure “after U.S. refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil”, ANZ Research said in a note on Thursday.

Due to shutdowns ahead of Hurricane Laura, U.S. refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity, the EIA said. Some analysts believe processing will not rebound in the fall.

“These factors suggest a seasonal drop-off in refinery runs and higher oil inventory levels as we advance through September,” AxiCorp market strategist Stephen Innes said.

(Additional reporting by Ahmad Ghaddar in London; Shu Zhang in Singapore and Sonali Paul in Melbourne; editing by Jason Neely, Steve Orlofsky and David Gregorio)

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