Oil dropped on Thursday, adding to sharp overnight losses as U.S. crude inventories unexpectedly increased, worries of recession mounted and economic data out of China and Europe disappointed.
Brent crude was down 37 cents, or 0.6 percent, at $59.11 a barrel by 0300 GMT, after falling three percent in the last session.
U.S. crude was down 25 cents, or 0.5 percent, at $54.98 a barrel, having dropped 3.3 percent in the previous session.
The combination of a slew of data suggesting a slowdown in global growth amid the U.S.-China trade war and persistently high levels of oil in U.S. storage has punctured recent optimism in crude markets, but stoked expectations that leading producers may take further steps to support prices.
“Oil prices, though supported by OPEC-led production curbs, … face severe headwinds as traders swing between demand-side worries and supply curtailment policies,” said Benjamin Lu, analyst at Phillip Futures in Singapore.
The Organization of the Petroleum Exporting Countries (OPEC) has been mostly trimming production since the start of 2017 and traders say they expect Saudi Arabia to reduce output further amid slowing global oil demand.
The U.S. Treasury bond yield curve inverted on Wednesday for the first time since 2007, a sign of investor concern that the world’s biggest economy may fall into recession.
China reported disappointing data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the U.S. intensifies.
Global economic worries, amplified by tariff conflicts and uncertainty over Brexit, are also hitting European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed, while the euro zone’s GDP barely grew in the second quarter of 2019.
A second week of unexpected builds in U.S. crude inventories is adding to the pressure on oil prices.
U.S. crude stocks grew by 1.6 million barrels last week, compared with analyst expectations for a decrease of 2.8 million barrels, as refineries cut output, the Energy Information Administration (EIA) said in a report.
At 440.5 million barrels, inventories were about 3% above the five-year average for this time of year, the EIA said.