NEW YORK - Oil prices fell more than US$2 on Thursday, driven lower by robust US inventories, a weaker world demand forecast and expectations that Hurricane Emily could spare offshore oil facilities.
US crude for August delivery CLc1 dropped US$2.21, down 3.7 per cent, to US$57.80 a barrel, extending aloss of 61 cents on Wednesday. London Brent crude LCOc1 fell 96 cents to US$57.31 a barrel.
"With Emily's projected path appearing to veer away from the production areas ... the short term volatility is now on the downside," said Nauman Barakat of Refco brokerage.
Hurricane Emily strengthened on Thursday in the Caribbean but passed well north of Opec producer Venezuela's oil operations. Weather forecasters also expected it to steer clear of US oil and gas fields off the coast of Texas and Louisiana.
Offshore operations in the Gulf of Mexico, home to about a quarter of US oil and gas production, are already nearly back to normal following shut-ins from last week's Hurricane Dennis, the Minerals Management Service said Thursday.
Easing storm worries added to the bearish impact of data from the US Energy Information Administration released on Wednesday.
The data revealed a 3.2 million barrel increase in distillates, including heating oil and diesel, bringing stockpiles into the upper half of the average range for this time of year, the EIA said.
Overall crude stocks fell by 3.9 million barrels after storms in the Gulf of Mexico last week delayed offloading of imports, but they were still well above the upper end of the average.
Bearish sentiment was further underpinned on Wednesday after the International Energy Agency, energy advisor for 26 industrialized nations downgraded its projection for world oil demand this year.
The agency said growth in the United States and China, the world's two biggest oil consumers, was slower than expected with Chinese oil demand turning negative year-on-year in June.
