Oil prices fell for a second day on Wednesday as weak Chinese factory data triggered concerns of an economic slowdown that could lower oil demand and, in the United States, industry data showed an increase in crude stockpiles amid its soaring output.
US West Texas Intermediate crude was down 41 cents, or 0.65 per cent, at $62.60 a barrel by 0342 GMT, after falling 90 cents the previous session.
Brent crude was down 40 cents, or 0.6 per cent, at $66.23 a barrel. On Tuesday, the contract fell 87 cents to close at $66.63.
Traders said oil prices declined on concerns a slowdown in global economic growth after China reported on Wednesday that factory growth in February slowed to the lowest since July 2016.
China is the world’s second-biggest economy and the biggest importer of oil. Crude oil demand is highly correlated to economic growth.
While the week-long Lunar New Year holiday this month disrupted business activity, traders also pointed to tougher pollution rules that curtailed factory output.
In the US, the world’s biggest oil consumer, rising crude stockpiles weighed on oil prices.
Data from the American Petroleum Institute showed on Tuesday that crude inventories rose by 933,000 barrels in the week to February 23, to 421.2 million.
Refinery crude runs dropped by 209,000 barrels per day (bpd), API data showed, implying a drop in demand for feedstock crude. Gasoline stocks rose by 1.9 million barrels.
Official data from the US Energy Information Administration (EIA) is due out later on Wednesday.
Soaring US production has pressured oil futures at a time when members of the Organisation of the Petroleum Exporting Countries (OPEC) and Russia have reduced output to support prices, reports Reuters.
“Climbing US production continues to weigh on the market as traders fear that the OPEC output cuts will be nullified by the rising US output,” said William O‘Loughlin, investment analyst at Australia’s Rivkin Securities.
US crude oil production has risen by a fifth since mid-2016 to more than 10 million bpd.
On Tuesday, International Energy Agency Executive Director Fatih Birol said the United States will likely overtake Russia as the world’s biggest oil producer by 2019.
It already overtook Saudi Arabia, the world’s top crude exporter, late last year.