Oil prices extend losses as recession fears, inventories mount

TOKYO, Aug 15 (Reuters) - Oil prices fell on Thursday to
extend sharp overnight losses as U.S. crude inventories
unexpectedly rose, fears of recession mounted and economic data
out of China and Europe disappointed.
Brent crude LCOc1 was down 39 cents, or 0.7%, at $59.09 a
barrel by 0034 GMT, after falling 3% in the last session.
U.S. crude CLc1 was down 28 cents, or 0.5%, at $54.95 a
barrel, having dropped 3.3% in the previous session.
The combination of a slew of data suggesting a slowdown in
global growth amid the U.S.-China trade war and persistently
high levels of oil in U.S. storage has punctured recent optimism
in crude markets, stoking expectations leading oil producers may
take further steps to support prices.
"This latest collapse in prices is likely to put further
pressure on Saudi Arabia," ANZ said in a note. "It has already
hinted at cutting production to arrest the falls."
The Organization of the Petroleum Exporting Countries has
been mostly trimming production since the start of 2017 and
traders say they expect Saudi Arabia to reduce output further
amid slowing global oil demand. The U.S. Treasury bond yield curve inverted for the first
time since 2007, a sign of investor concern that the world's
biggest economy may fall into recession. China reported disappointing data for July, including a
surprise drop in industrial output growth to a more than 17-year
low, underlining widening economic cracks as the trade war with
the U.S. intensifies.
Global economic worries, amplified by tariff conflicts and
uncertainty over Brexit, are also hitting European economies. A
slump in exports sent Germany's economy into reverse in the
second quarter, data showed, while the euro zone's GDP barely
grew in the second quarter of 2019.
A second week of unexpected builds in U.S. crude inventories
is adding to the pressure on oil prices. EIA/S
U.S. crude stocks USOILC=ECI grew by 1.6 million barrels
last week, compared with analyst expectations for a decrease of
2.8 million barrels, as refineries cut output, the Energy
Information Administration (EIA) said in a report.
At 440.5 million barrels, inventories were about 3% above
the five-year average for this time of year, the EIA said.