NEW YORK, Aug. 14 (Xinhua) -- Oil prices sank about 3 percent on Wednesday as oversupply fears were renewed by sluggish economic data in Europe and unexpected rise of U.S. crude inventories.
The West Texas Intermediate for September delivery erased 1.87 U.S. dollars to settle at 55.23 dollars a barrel on the New York Mercantile Exchange, while Brent crude for October delivery lost 1.82 dollars to close at 59.48 dollars a barrel on the London ICE Futures Exchange.
Germany, the economic engine in the European Union, has just announced that its gross domestic product contracted 0.1 percent in the second quarter of 2019.
Many analysts contributed the growth downturn in Germany to trade tensions between the world's leading economies, as German economy relies heavily on exports.
Data showed that the eurozone economy slowed to a 0.2 percent growth rate in the second quarter, according to Eurostat.
On Wednesday, the yield on the benchmark 10-year Treasury note briefly broke below the 2-year note rate, a reliable recession signal in the eyes of bond investors.
With the 10-year Treasury yield slumping to 1.58 percent, leaving it even further below the 3-month Treasury-bill rate at 1.95 percent, the NY Fed's recession model -- based on that yield spread -- suggests the odds of an economic contraction have risen to 37 percent, said Paul Ashworth, chief U.S. economist at Capital Economics, in a note.
Analysts said market participants were worried that global economic downturn would further impact oil demand.
The International Energy Agency (IEA) cut its global oil demand growth for this year and next in its latest "Oil Market Report" on Friday, citing fears of an economic downturn as the U.S.-China trade disputes cast a shadow over markets.
From January to May, the growth of oil demand hit the lowest since the financial crisis in 2008. According to the IEA, global oil demand growth in the first half of the year was "very sluggish."
The IEA said the outlook for oil demand growth is "fragile," with a greater likelihood of a downward revision than an upward one.
Also on Wednesday, the U.S. Energy Information Administration said U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, increased by 1.6 million barrels during the week ending Aug. 9.
At 440.5 million barrels, U.S. crude oil inventories were about 3 percent above the five-year average for this time of year.
It is the second week in a row where commercial crude stocks have risen despite analysts' expectations of a fall.
Lower demand from refineries is the primary reason for another unexpected rise in commercial crude stocks, analysts said.
Analysts noted that while market was sensitive to demand-side news, it has been indifferent to positive supply side news.
The fact that price-supportive supply news that OPEC crude production fell to a five-year low in July barely moved prices showed that sentiment, not fundamentals, was driving prices at the moment, UBS analyst Giovanni Staunovo said in a note.
Global oil supply held steady in July above 100 million barrels per day but fell below earlier levels for the first time since November 2017. Robust compliance with OPEC+ supply cuts and losses from Venezuela and Iran saw OPEC oil production fall by 2 million barrels per day from the level of July 2018, according to IEA's report.
