Oil prices drop over concerns of low demand

Shafaq News / Oil prices fell on Thursday and were on track to snap a three-day winning streak, as concerns over low demand following a surprise U.S. crude inventory build outweighed jitters over global trade disruptions due to tensions in the Middle East.

Brent crude futures fell 22 cents, or 0.3%, to $79.48 a barrel by 0303 GMT while U.S. West Texas Intermediate crude was at $74 a barrel, also down 22 cents or 0.3%.

Both benchmarks ended higher on Wednesday for a third straight session, as investors worried about trade disruptions given major maritime carriers chose to steer clear of the Red Sea route, with longer voyages increasing transport and insurance costs.

"Market focus returned to sluggish global demand as the impact on the Red Sea is seen to be limited on oil as long as it does not spill over into the Strait of Hormuz," said Tsuyoshi Ueno, senior economist at NLI Research Institute.

"A build in U.S. crude stocks and record domestic oil production also added to pressure," he said.

The U.S. Energy Information Administration (EIA) said on Wednesday that U.S. crude inventories (USOILC=ECI) rose by 2.9 million barrels in the week to Dec. 15 to 443.7 million barrels, compared with analysts' expectations in a Reuters poll for a 2.3 million barrel drop.

EIA also said U.S. crude output rose to a record 13.3 million barrels per day (bpd) last week, up from the prior all-time high of 13.2 million bpd.

(Reuters)