Crude oil storage tanks are seen from above at the Cushing Oil Center on March 24, 2016 in Cushing, Oklahoma. Get license rights
BENGALURU, Oct 24 (Reuters) – Oil prices fell for a third straight session on Tuesday after sluggish economic data from Germany, the euro zone and Britain weighed on the outlook for energy demand.
Brent crude futures were down $1.76, or 2%, at $88.07 a barrel at 11:20 a.m. EDT (1520 GMT). US West Texas Intermediate crude futures were down $1.91, or 2.2%, at $83.58 a barrel.
Eurozone business activity data took a surprising downward turn this month, suggesting the federation could be slipping into recession.
German readings suggested a recession was underway in that country. Britain’s businesses reported another decline in monthly activity, highlighting recession risks ahead of the Bank of England’s interest rate decision next week.
„There’s definitely a conversation about the global economy being worse this week than last week,” Mizuho analyst Robert Yawker said. „It doesn’t help that many leading bankers and financial experts in Saudi Arabia today are talking about how bad the economy is,” he added, referring to the Future Investment Initiative event dubbed „Davos in the Desert.”
Unlike Europe, US data showed business output rose in October as manufacturing pulled out of a five-month contraction. The relative strength of the US economy helped propel the dollar, making dollar-denominated oil more expensive for holders of other currencies.
According to the International Energy Agency, fossil fuel demand is expected to peak by 2030 based on governments’ current policies.
Both oil benchmarks fell more than 2% on Monday as diplomatic efforts intensified to contain the conflict between Israel and Hamas in the Middle East, the world’s biggest oil-producing region.
Julius Baer analyst Norbert Rucker said, „The risk premium in oil prices will disappear within weeks … We see prices coming down next year.”
In the US, a preliminary poll by Reuters had expected a weekly rise in crude oil inventories.
US storage reports are due from the American Petroleum Institute industry group at 4:30 pm EDT (2030 GMT) and from the US Energy Information Administration at 10:30 am EDT (1430 GMT) on Wednesday.
Additional reporting by Mohi Narayan in New Delhi and Yuka Obayashi in Tokyo; Editing by Shizu Nomiyama and Mark Potter
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