Oil prices trading down 3 percent on weak oil demand

Oil prices have slipped for the sixth consecutive session trading down around 3 percent on figures showing weaker US oil demand. New York’s main futures contract, light sweet crude oil futures for delivery in January, slumped by almost two dollars to an eight week low of $70.60 on the NYMEX, while Brent North Sea crude oil futures dipped by 2.80 dollars to $72.30 on the ICE Futures Exchange.

A fresh report showing larger than expected surge in US stockpiles of refined fuel have rekindled apprehensions of lackluster demand in USA. Instead of an anticipated fall by 500,000 barrels, a report by the US Department of Energy’s (DoE) on US petroleum stockpiles has shown an unexpected rise in distillate stocks by 1.6 mln barrels in the week ended December 4.

US Crude oil reserves fell by 3.8 million barrels to 336.1 million barrels. Distillates include diesel and heating fuel, which usually sees a surge in demand as the winter sets in the Northern Hemisphere. Mild weather and sluggish demand from goods transportation sector has kept demand for distillate fuel oil almost 10% below 2008 levels. This coupled with a strengthening dollar has impacted oil prices.

Tags:  oil demand, oil prices, trading, US