London: Oil prices fell towards $72 a barrel on Tuesday and were on track to fall for the fifth straight day as gloom about the ability of top oil consumer the United States to work through record stocks weighed on sentiment.
US crude oil inventories likely rose last week by 800,000 barrels last week, according to a preliminary Reuters poll of eight analysts ahead of American Petroleum Institute data at 2:00am, and more authoritative US government data on Wednesday.
Typically, stocks fall through the summer driving season but they instead rose to a record high in the United States in the week to 13 August.
US crude prices fell by 64 cents to $72.46 a barrel by 2:45pm, with an early fall in European equities adding to the downwards momentum, leaving prices at seven-week lows.
ICE Brent crude futures shed 48 cents by the same time, maintaining its premium to the rival benchmark established last week.
“The bearish trend since 17 August is intact. Economic momentum is slowing and everyone is worried about it. Both supply and demand fundamentals are weak,” said VTB Capital analyst Andrey Kryuchenkov.
Hurricane Danielle strengthened over the Atlantic Ocean to a category two storm on Tuesday but posed no threat to land or energy interests, the US National Hurricane Center said.
This Atlantic hurricane season was forecast to be the most active in five years, inflating oil prices with a storm-related premium, but few have so far emerged.
For now, analysts said that the potential for future storms is likely to support oil at around $70 a barrel.
“The fact that we have yet to enter the most critical part of the hurricane season (September) should prevent complacency and likely force the market to hold $70 support,” said Edward Meir, senior commodity analyst at MF Global.
Oil prices have fallen by around 13% since hitting a three-month high of $82.97 a barrel in early August as evidence has mounted that the fuel demand recovery is likely to be protracted while stocks have swelled.
Traders will look to a raft of economic data including US chain store sales and existing home sales later on Tuesday for signs that either confirm or flout this view.
Last week’s economic reports included data showing US jobless claims hit a nine-month high and US regional manufacturing contracted for the first time in a year.
Investors’ interest in oil diminished last week. Money managers cut net long crude oil positions on the New York Mercantile Exchange, the Commodity Futures Trading Commission said on Friday.