LONDON, (Reuters) – Brent crude oil fell for a seventh consecutive session on Wednesday after U.S. crude stocks rose last week, offsetting earlier strength prompted by signs that Chinese demand could stage a recovery.
China’s economy is slowly picking up from its weakest period of growth in three years, a survey of purchasing managers signaled, with new orders and output at their highest in months.
But a report showing a rise in crude stocks last week in the United States, the world’s top oil consumer, coupled with poor economic data from the euro zone, painted a poorer picture for demand.
Brent crude was down 42 cents at $107.83 a barrel by 1455 GMT and looked on track for its lowest close since early August. It fell in each of the six previous trading sessions, the longest losing streak in more than two years.
U.S. oil fell $1 cents to $85.67.
U.S. stocks of crude rose by 5.9 million barrels in the week to October 19, the Energy Information Administration (EIA) reported. Analysts polled in advance by Reuters had forecast a smaller increase of 1.9 million barrels.
“The report is mostly bearish, with the large increase in crude oil inventories being the highlight of the report,” said John Kilduff, partner at Again Capital LLC in New York.
Crude oil inventories as measured by the API increased by 313,000 barrels in the week to October 19, compared with an analyst forecast for an increase of 1.9 million barrels.
Poor economic data from Europe also put pressure on prices, as businesses across the euro zone suffered their worst month since October, according to PMI data.
Manufacturing PMI in Germany, Europe’s largest economy, fell unexpectedly, while business sentiment dropped for the sixth consecutive month.
“Not only do these data points support the slowing economic scenario, but the PMI manufacturing index is an energy-sensitive index and directly translates to slower energy demand,” said Dominick Chirichella of New York’s Energy Management Institute.
“All of the above said, I think it is way too early to conclude that the global economy has stopped slowing or contracting,” he said.
Brent oil hit an intraday low of $107.31 on Tuesday, the weakest since September 20 and below its 100-day moving average at $107.42. The U.S. contract slumped by more than 3 percent to touch a session-low of $85.69, the lowest since July 13.
Lower supply from Nigeria, Africa’s top oil producer, has provided some support to prices, particularly Brent crude, which outperformed U.S. crude.
Nigeria’s oil production fell to around 2.1-2.2 million barrels per day (bpd) last week from an average of 2.5 million bpd this year, the state-oil company said, following flooding and a major outage of a Shell facility.
Output is now back to normal, an oil industry regulator said on Wednesday.