Oil prices fall in Asian trading amid concerns about weak US economic data
(MENAFN) Oil prices retreated in Asian trading on Thursday as market sentiment turned cautious following weaker-than-expected U.S. employment and business data, indicating a potential slowdown in the world's largest oil consumer's economy. brent crude futures dropped by 48 cents, or 0.55 percent, to USD86.86 per barrel by 0342 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 51 cents, or 0.62 percent, to USD83.36 per barrel, with trading activity subdued due to the U.S. Independence Day holiday.
The decline in oil prices comes amid reports showing U.S. crude shipments to Europe hit a two-year low in June, as European buyers turned to cheaper oil sources from the region and West Africa. However, there are expectations of a potential recovery in purchases during July and August.
U.S. economic data released on Wednesday highlighted concerns about reduced demand. New filings for unemployment benefits rose last week, while filings for continued claims reached a two-and-a-half-year high at the end of June. Additionally, the ADP report revealed that private sector payrolls increased by 150,000 jobs in June, falling short of expectations for a gain of 160,000 after an upwardly revised figure of 157,000 in May.
Further indicating economic slowdown, the Institute for Supply Management's non-manufacturing index, which measures U.S. services sector activity, dropped to a four-year low of 48.8 in June, well below the anticipated 52.5, driven by a sharp decline in orders.
Despite the downturn in economic indicators, analysts noted that the weaker data could prompt the Federal Reserve to initiate interest rate cuts, which could potentially stimulate oil markets by boosting demand. The Energy Information Administration's report on Wednesday also provided some support as it indicated larger-than-expected declines in U.S. crude oil and fuel inventories for the week ending June 28, mitigating steeper price declines in the oil market.
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