Investing.com - West Texas Intermediate oil futures extended heavy losses from the prior session on Wednesday, as market participants looked ahead to fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of demand in the world’s largest oil consumer.
Crude oil for delivery in October on the New York Mercantile Exchange dropped $1.00, or 2.2%, to trade at $44.41 a barrel during European morning hours.
A day earlier, Nymex oil prices plunged $3.79, or 7.7%, after data showed that China’s factory sector contracted at the fastest rate in three years, while manufacturing activity in the U.S. fell to a more than two-year low, fueling concerns over the health of the global economy.
The U.S. Energy Information Administration is to release its weekly report on oil supplies at 10:30AM ET later Wednesday. The data was expected to show that crude stockpiles rose by 0.1 million barrels last week, while gasoline stockpiles were forecast to decline by 1.4 million barrels.
After markets closed Tuesday, the American Petroleum Institute, an industry group, said that U.S. crude inventories rose by 7.6 million barrels in the week ended August 28, compared to expectations for a drop of 0.8 million.
Elsewhere, on the ICE Futures Exchange in London, Brent oil for October delivery slumped 89 cents, or 1.8%, to trade at $48.67 a barrel. On Tuesday, Brent futures sank $4.59, or 8.48%, to end a 25% three-session short-covering rally, the biggest three-day surge since 1990.
Crude oil prices have been under heavy selling pressure in recent months amid concerns over a growing glut in world markets.
Global oil production is outpacing demand following a boom in U.S. shale oil production and after a decision by the OPEC last year not to cut production.
Worries that the Federal Reserve will hike rates at its next policy meeting in September also weighed.
Later in the session, the U.S. was to release a report on private sector jobs growth. Investors were also looking ahead to Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.
The timing of a Fed rate hike has been a constant source of debate in the markets in recent months.