Oil prices fell towards $77 a barrel today, extending the previous session's decline of 2.6 per cent, as fears of a protracted economic recovery in the United States drove investors to continue to take profit from oil's recent rally.
Data this week from the United States has raised questions about a sustained recovery with consumer confidence dipping to recessionary levels and new home sales falling unexpectedly.
Concerns over the fragility of the health of the US economy and weakness in energy demand have prompted oil prices to fall about 6 per cent over five out of six trading sessions, since striking a one-year high of $82 on October 21st.
US crude for December delivery fell 16 cents to $77.30 a barrel, after settling down $2.09 at $77.46 yesterday on government data that showed a surprise build in US. gasoline inventories last week.
London Brent crude fell 9 cents to $75.77.
In a sign of investors' skittishness towards stocks and other riskier assets like commodities, the VIX indicator, Wall Street's favourite barometer for market sentiment, jumped 12.4 per cent yesterday.
Analysts said traders were likely to remain wary ahead of the US gross domestic product (GDP) data due later today.
The market is expecting the world's largest economy to expand 3.3 per cent in the third quarter, but a lower growth figure could heighten concerns of a sluggish recovery and prompt a further sell-off in riskier commodities.
The financial crisis has forced the shutdown of factories across the globe and slashed global energy demand, prompting oil prices to fall from their peak of about $147 struck last July.
Oil demand in Japan, the world's third-largest energy consumer, looks to have declined by its widest amount in five months in September, Reuters projections based on industry data showed, as firm gasoline sales were not enough to offset weak industrial demand.
The US Energy Information Administration data today showed gasoline stockpiles logged an unexpected gain of 1.7 million barrels.
Reuters