Singapore: Oil prices fell in Asian trade Friday after weaker-than-expected US economic growth in the second quarter focussed the spotlight on slowing global energy demand, analysts said.
New York’s main contract, light sweet crude for September delivery, was down 82 cents to $123.26 a barrel, after dropping $2.69 at the close of floor trading Thursday on the New York Mercantile Exchange.
On Wednesday, the contract rallied $4.58 driven by an unexpected decline in US petrol stockpiles.
Brent North Sea crude for September delivery was 63 cents lower at $123.35 a barrel after tumbling $3.12 on Thursday. It had also rallied by $4.39 on Wednesday in London.
“Sentiment is more focussed on slowing demand rather than short-term supply disruptions,” said Mark Pervan, a senior commodities strategist with ANZ Bank in Melbourne.
The US Commerce Department reported the world’s largest economy grew an annualised 1.9% in the second quarter, missing the 2.3% growth expected by most forecasts.
It also revised 2007 fourth-quarter growth to a 0.2% contraction — the first reversal for the US economy since the 2001 recession.
“It confirms the slowing US demand story,” Pervan said.
Concerns over the health of the world’s largest economy — a major buyer of global exports — sent crude down more than $23 reaching a record peak above $147 11 July.
“Momentum is still to the downside,” said Nimit Khamar, an oil analyst at the Sucden brokerage in London.
In its weekly US energy reserves report Wednesday, the Department of Energy (DoE) said that gasoline inventories dropped by 3.5 million barrels in the week ended 25 July, overturning market forecasts for a gain of 400,000 barrels.
US crude reserves fell by 100,000 barrels in the second straight weekly decline, but the drop was less than the consensus forecast of 1.25 million barrels.
Pervan said prices are expected to drift lower next week but are likely to remain volatile due to geopolitical risks.