Oil prices fell for the eighth day in a row today as a sharp and unexpected rise in US crude stocks deepened concerns over waning demand.
North Sea bellwether Brent crude last stood 25 cents lower at $24.64 after falling to $24.55 a barrel in opening trade. US benchmark light crude fell 17 cents to $25.40 a barrel.
New data from the American Petroleum Institute (API) recorded a 5.56 million barrel jump in US crude tanks in the week to July 13th, far above forecasts of a slim 500,000 barrel decline.
The increase came despite a five-week stoppage of oil exports from Iraq - one of the biggest suppliers to the United States - and backed recent signals that consumption was tailing off.
Comments by a Saudi source that the world's biggest oil exporter believes OPEC could cut production before its September 26th meeting offered a brief respite to the downward spiral but prices soon returned their opening levels.
Under an OPEC price stability mechanism, the cartel aims to maintain a reference basket of seven crudes between $22 and $28 a barrel. OPEC's president can order an output cut of 500,000 barrels per day if prices should fall below the bottom limit for 10 consecutive trading days.
OPEC's basket price stood at $23.20 yesterday, down from $25 on July 6th when world benchmark prices began the recent slide.
Oil has been hammered $2 to $3 lower in the last two weeks by growing evidence that demand is being dented by the global economic downturn and as 18 months of high prices curb consumers' appetite for fuel.
Analysts said there appeared little to turn around the recent downward price trend given the depressed demand picture, which was underpinned by the International Energy Agency (IEA) last week when it sliced in half a forecast for global growth in petroleum use.
Iraq's strong return to the oil market after a five-week stoppage to crude exports, also will do little to cheer prices.
The United Nations, which monitors Iraqi oil sales under the oil-for-food program, said Baghdad exported about 2.27 million bpd in the first three days after sales resumed last week.