“Oil prices continued to slide lower after a drop in China’s industrial profits in August reinforced worries that the world’s second-largest economy continues to decelerate,” said Edward Moya, senior market analyst at OANDA.
Chinese industrial firms reported a contraction in profits in August, reversing the previous month’s brief expansion, as weak domestic demand and a trade war with the United States weighed on corporate balance sheets.
Brent crude LCOc1 futures fell 49 cents, or 0.8%, from the previous session’s close to $62.25 a barrel by 0603 GMT.
U.S. West Texas Intermediate (WTI) crude futures CLc1 fell 23 cents, or 0.4%, to $56.18 a barrel.
The rapid return of oil production from top world exporter Saudi Arabia less than two weeks after the Sept. 14 attacks also squashed risk premiums and dragged crude prices lower, analysts said.
“For most of the week ... the market has been trading lower as oil bulls have been discouraged by the quicker-than-expected return of Saudi oil output,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.
WTI futures were down 3.3% so far for the week, marking the largest weekly loss in 10 weeks, while Brent was down 3.2% on the week, its largest weekly loss in seven.
A surprise 2.4 million-barrel build in U.S. crude inventories last week also weighed on prices.
U.S. inventories may rise further over the near term, further pressuring prices, as American refiners curb runs for maintenance, analysts said.
“The expected lower demand for oil inputs into (U.S.) refineries typically sees U.S. crude inventories swell, all of which could pose a significant downside risk for prompt oil prices,” Innes said.
Emerging details connected to the impeachment inquiry into U.S. President Donald Trump also helped dent demand sentiment, analysts said.
“Trump’s impeachment inquiry also raises uncertainty surrounding his foreign policy,” said Margaret Yang Yan, a market analyst at CMC Markets, particularly on Iran and China.
“The market is assessing how this political turbulence may affect his ability and position to impose further sanctions on Iran, which will have significant impact on global oil supply.”
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