September 26, 2013 - 11:48 AMT
PanARMENIAN.Net - Oil prices fell again Thursday, Sept 26, amid worries about the U.S. economy and signs of a slowdown in demand, the Associated Press reports.
Benchmark oil for November delivery was down 33 cents to $102.33 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped 47 cents on Wednesday to finish at $102.66 a barrel, the lowest closing price since July 3.
Oil has fallen 7 percent since closing at a two-year high of $110.53 on Sept 6. Since then, diplomatic efforts have averted a U.S. military strike against Syria, and tense relations between the U.S. and Iran have shown signs of a thaw. As a result, the market has removed the so-called political risk premium from oil, which some analysts put at about $5 to $6 a barrel.
But worries about the U.S. economy continued to trouble traders. Orders for durable goods, which are big ticket items expected to last at least three years, increased a disappointing 0.1 percent in August, held back by a decline in demand for defense aircraft and other military goods.
Meanwhile, demand for so-called core capital goods rose 1.5 percent, not enough to reverse the decline of 3.3 percent the previous month. Core capital goods are a good measure of businesses' confidence in the economy and include items that point to expansion, such as machinery and computers.
"This suggests that businesses continue to remain cautious on spending amidst uncertainties," said Cynthia Kalasopatan of Mizuho bank Ltd. in Singapore in a market commentary.
The U.S. Energy Information Administration said Wednesday that U.S. crude reserves soared 2.6 million barrels in the week ending Sept20. Analysts on average had expected a drop of 900,000.
"The surge in U.S. crude inventories was not expected at all, and it has dampened oil prices along with the removal of the risk premium surrounding Syria," AFP quoted Desmond Chua, market analyst at CMC Markets in Singapore, as saying.
Brent crude, the benchmark for international crudes used by many U.S. refineries, slipped 11 cents to $108.21 a barrel on the ICE Futures exchange in London.
Prices were also under pressure following fresh signs of thawing U.S.-Iran relations, which could possibly lead to an easing of Western sanctions on the crude producer and allow it to export oil more freely.
Iran's economy has been crippled by a series of UN and U.S. sanctions aimed at bringing an end to its nuclear program, which the West claims is being used to develop nuclear weapons. Iran denies the assertion.