Oil prices drop amid fears of global economic slowdown

PanARMENIAN.Net - Oil sagged for a fourth day Thursday, Sept 20, as high inventories and economic data from China and Japan reinforced fears of a global economic slowdown, AP reports.

Benchmark oil for October delivery was down 90 cents to $91.08 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract finished at $91.98 on Wednesday, dropping $3.31, or 3.5 percent.

Brent crude traded on the ICE Futures exchange in London fell 9 cents to $108.10 per barrel.

The release of weak Japanese trade data Thursday and figures showing China's manufacturing sector was still contracting weighed on sentiment. Signs that the global economy is slowing down tend to push oil prices lower because people and businesses use less energy.

Japan's exports in August totaled 5.05 trillion yen ($64.33 billion), down 5.8 percent from a year earlier. Imports were also down. In China, meanwhile, a preliminary survey by HSBC of Chinese manufacturing activity showed a contraction for September, although at a slower rate than August.

Separately, crude inventories rose three times more than analysts had expected last week. Crude supplies grew by 8.5 million barrels to 367.6 million barrels. That's 8.4 percent higher than at the same time last year, according to the Energy Information Administration's weekly report.

Analysts said the uptick in inventory was tied to the return of production by U.S. Gulf Coast refineries after being shut down by Hurricane Isaac.

"We can safely assume that most of this has been on the back of platforms returning to production ... we are seeing the return of the refineries in the Gulf area too," Carl Larry of Oil Outlooks and Opinions said in a newsletter.

In other futures trading in New York, wholesale gasoline was 0.2 cent higher at $2.73 per gallon. Heating oil slipped 0.2 cent to $3.042 per gallon. Natural gas rose 1.5 cents to $2.777 per 1,000 cubic feet.