Oil Prices Drop by 3% Lowering Brent Crude to $59.48 a Barrel

August 15, 2019

Oil prices shed 3% on Wednesday after weak economic data from China and the euro zone revived global demand fears and U.S. crude inventories rose unexpectedly for the second week in a row.

Brent crude settled at $59.48 a barrel, shedding $1.82, or 3%, losing some of the previous session’s sharp gains after the United States moved to delay tariffs on some Chinese products.

The global benchmark rose 4.7% on Tuesday, its biggest daily percentage gain since December.

U.S. West Texas Intermediate crude futures settled at $55.23 a barrel, falling $1.87, or 3.3%, after having risen 4% the previous session, the most in just over a month.

China reported disappointing data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the United States intensifies.

The global economic slowdown, amplified by tariff conflicts and uncertainty over Brexit, is also hitting European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed.

A second week of unexpected builds in U.S. crude inventories added to the pressure on the oil markets.

U.S. crude stocks grew by 1.6 million barrels last week, compared with analysts’ expectations for a decrease of 2.8 million barrels, as refineries cut output, the Energy Information Administration (EIA) said in its report.

At 440.5 million barrels, inventories were about 3% above the five-year average for this time of year, the EIA said in its weekly report.

(Reuters)