Oil falls near $77 on energy demand doubts
August 13, 2010 2:17 AM EST
Oil slipped to around $77 a barrel on Thursday, heading for a third straight session of losses, on lingering doubts over the outlook for fuel demand in the world's biggest energy consumers.
U.S. stockpile data on Wednesday showed a sharp rise in gasoline inventories, highlighting the weakness of demand in what is usually the peak summer driving season.
China, which rivals the U.S. as the world's biggest oil consumer, showed signs of an abrupt slowdown in economic growth this week, reflected in a drop on Asian stock exchanges on Thursday.
U.S. crude for September delivery earlier fell by more than $1 and was 86 cents lower at $77.16 a barrel by 1100 GMT (7 a.m. EDT), extending its decline following a 3 percent fall on Wednesday, its biggest daily drop in six weeks.
Brent crude was at $76.69 a barrel, down 95 cents.
"The mood of the oil market has deteriorated significantly in recent days," said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.
"We can see there has been a drop in risk appetite which has resulted in lower stock markets and a stronger (U.S.) dollar."
The U.S. dollar held gains against a basket of other major currencies on Thursday after rising nearly 2 percent at one point overnight. A stronger dollar can make oil more expensive for buyers holding alternative currencies.
Summer gasoline demand in the U.S. remained unusually weak as official data on Wednesday showed a larger-than-expected build in stocks in the week to August 6.
"Recovery in gasoline demand seems to be over already as we've passed the peak driving season," Fritsch said.
The International Energy Agency (IEA) added to negative sentiment over future energy use, after the adviser to 28 industrialized countries said oil demand growth next year would be sharply lower if the economy falters.
Meanwhile, weak economic data continues to paint a picture of a fragile global recovery after the Federal Reserve on Tuesday warned about the U.S. economy.
The U.S. trade gap widened 18.8 percent in June, suggesting its second-quarter economic growth was weaker than previously thought, adding to a weaker picture on factory output and imports from China.
(Additional reporting by Florence Tan in Singapore; editing by James Jukwey)