- POSTED: 27 Jun 2014 04:50
Global oil prices fell as weak US economic data stoked fresh demand fears in top oil consumer the United States, while Iraqi crude supplies appeared unaffected by ongoing violence.
NEW YORK: Global oil prices fell on Thursday as weak US economic data stoked fresh demand fears in top oil consumer the United States, while Iraqi crude supplies appeared unaffected by ongoing violence.
US benchmark West Texas Intermediate for August delivery dropped 66 cents to $105.84 a barrel.
European benchmark Brent oil for delivery in August declined 79 cents to $113.21 a barrel in London.
Analysts said a lacklustre report on US consumer spending raised questions about the strength of the economic recovery. The Commerce Department data showed consumer spending rose a mere 0.2 percent in May after flattening in April.
The report came on the heels of US Energy Information Administration data Wednesday that showed an unexpected build in US crude inventories last week.
"As a result of the weaker data and the build in crude stocks... investors are all of a sudden refocusing their attention on the demand side of things," said analyst Fawad Razaqzada at trading site Forex.com.
"They are realizing that demand is simply not strong enough to justify oil prices at these elevated levels."
Traders also kept watch on Iraq, where Iraqi forces launched a helicopter-borne assault aimed at opening the way to retaking militant-held Tikrit, while a suicide bomb in a predominantly Shiite area of Baghdad killed 19 people.
Despite the violence, "tensions in the oil market are easing on indications that production and exports from the southern oil fields have not been disrupted, and may be even ramping higher on their prior schedule," said a note from Citi Futures energy analyst Tim Evans.
Traders also reassessed a news report late Tuesday that said the US had permitted the first exports of unrefined oil in nearly four decades when it greenlighted the sale of ultra-light, minimally processed oil known as condensate to foreign buyers.
Analysts said the US decision could signal an eventual reversal on the US ban on exports of WTI and other benchmark crudes. The report had helped lift oil prices Wednesday.
But Thursday's retreat in oil prices suggests the immediate impact of the US policy decisions on condensate has "apparently run its course," said Evans.