Crude prices fell on Wednesday despite an upbeat weekly U.S. inventory report, as investors traded on concerns that the global economy is awash in crude.
In the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in September traded down 0.49% at $96.91 a barrel during U.S. trading. New York-traded oil futures hit a session low of $96.75 a barrel and a high of $98.12 a barrel.
The September contract settled down 0.93% at $97.38 a barrel on Tuesday.
Nymex oil futures were likely to find support at $96.26 a barrel, the low from Feb. 3, and resistance at $102.10 a barrel, the high from July 28.
The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories declined by 1.8 million barrels in the week ended August 1, compared to expectations for a decline of 1.7 million barrels.
Total U.S. crude oil inventories stood at 365.6 million barrels as of last week.
The report also showed that total motor gasoline inventories decreased by 4.4 million barrels, confounding forecasts for a gain of 0.3 million barrels, while distillate stockpiles fell by 1.8 million barrels, stronger than expectations for an increase of 0.9 million barrels.
Still, while the U.S. economy continues to show signs of more sustained economic recovery, concerns the rest of the world isn't catching up as quick watered down crude oil prices, as a less robust global economy will consume less fuel and oil.
Italy's economy shrank for a second consecutive quarter in the three months to June, which technically means the country is in recession.
ISTAT, Italy's statistical office, reported that the country's gross domestic product contracted by 0.2% in the second quarter, confounding expectations for growth of 0.2%.
Italy’s economy shrank 0.1% in the preceding quarter.
Annualized GDP declined at a rate of 0.3%, worse than expectations for an increase of 0.1%.
Earlier this week, China's HSBC services purchasing managers' index dropped to 50.0 in July from 53.1 in June, right on the 50 mark that separates expansion from contraction, which rattled nerves in energy markets amid fears of supply gluts.
Separately, on the ICE Futures Exchange in London, Brent oil futures for September delivery were up 0.06% and trading at US$104.67 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$7.76 a barrel.