Oil was down in the Asian trade today on fears of faltering energy demand after US crude reserves increased and the euro zone debt crisis showed no signs of abating.
New York’s main contract, West Texas Intermediate for delivery in August, fell 41 cents to $97.02 a barrel in the morning trade. Brent North Sea crude for August delivery shed 43 cents to $117.32.
Phillip Futures said investors were concerned that increasing US crude supplies and the escalating debt crisis in the euro zone could hurt energy demand.
The American Petroleum Institute had yesterday reported that crude inventories increased 2.3 million barrels last week to 359.4 million, rising “for the first time in six weeks’’.
Rising crude inventories indicate weaker demand in the United States, the world’s biggest oil consumer.
Meanwhile, the euro zone debt crisis, which had sparked international bailouts of Ireland, Greece and Portugal last year, is now touching Italy and Spain.
Yields on Italian and Spanish government debt have surged in recent days, and Ireland’s debt rating has been cut to junk, shaking confidence in the euro zone’s finances.
Crude prices had rebounded yesterday on market rumours that the European Central Bank was buying the bonds of distressed European governments and after the US Federal Reserve indicated that it planned only a gradual easing of its ultra-loose monetary policy.
The OPEC oil cartel has forecast a rise in oil demand into next year, but cautioned that “an unsteady world economy is negatively affecting the oil market and imposing a high range of uncertainty for the short term.”