Oil prices fell below $75 a barrel Wednesday after a report showed U.S. crude supplies swelled last week, renewing concerns about demand for fuel in the world’s largest economy.
By early afternoon in Europe, benchmark crude for September delivery was down 97 cents at $74.80 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 53 cents to settle at $75.77 on Tuesday, rebounding from five straight days of losses.
The gains ran out of steam after the American Petroleum Institute said late Tuesday that crude inventories rose sharply, by 5.87 million barrels, last week, against market expectations for a drop in supplies.
Inventories of gasoline and distillates also rose, the API said.
The Energy Department’s Energy Information Administration reports its weekly supply data – the market benchmark – later Wednesday.
Cameron Hanover said in a report that the API data was unexpected and surprising.
“The API numbers were bearish, showing inventory builds in both refined products and in crude oil stocks, and showing weaker demand,” it said. “The big question for Wednesday is whether the DOE report will in any way mirror the API numbers.”
Many analysts have been warning that the current oversupply of crude combined with feeble demand make it hard to justify oil prices above $70.
“Continued investor interest is the only factor working against a sharper fall in prices at present,” said a report from Commerzbank in Frankfurt.
In other Nymex trading in September contracts, heating oil fell 1.68 cents to $2.0091 a gallon and gasoline fell 2.55 cents to $1.9277. Natural gas eased 0.3 cent to $4.264 per 1,000 cubic feet.
In London, Brent crude was down 93 cents at $76.00 a barrel on the ICE Futures exchange.
Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.