Oil prices extended losses and fell closer toward $68 a barrel on Thursday, as data showing an unexpectedly high build up in US oil and products stockpiles reminded traders that oil prices may have run ahead of the demand fundamentals. Crude oil prices fell nearly 4 percent in the previous session and are on track to shed about 5 percent this week, as demand concerns resurface.
US crude for November delivery fell 63 cents to $68.34 a barrel by 0512 GMT, after settling down $2.79 on Wednesday. London Brent crude fell 55 cents to $67.44 a barrel. A bounce in the US dollar and a weak equities market also combined to exacerbate oil's fall on Wednesday. The US Energy Information Administration reported commercial stockpiles of crude rose 2.8 million barrels in the week to September 18, against analysts' expectations of 1.5 million barrels fall.
Gasoline inventories increased by 5.4 million barrels to 213.1 million, and distillates gained 3.0 million to hit a 26-year high of 170.8 million, according to the EIA. In a sign that oil demand was also struggling in Asia, data showed August crude imports by Japan, the world's third-largest energy consumer, fell 12.4 percent from a year ago and hit its lowest in 20 years.
Meanwhile, the dollar softened against higher-yielding currencies on Thursday as investors shifted their funds away from the greenback on expectations the Federal Reserve will keep interest rate very low for a long time. The worst global recession since the Great Depression has battered demand in the United States and other big consumer nations, shaving crude prices off record highs near $150 a barrel struck in July 2008 to below $33 a barrel in December.