Oil fell below $72 today in its third straight session of losses, as negative sentiment pervaded financial markets and investors favoured the safety of the dollar over riskier commodities.
Oil added to its drop of 1.9 per cent yesterday, when China's purchasing managers index (PMI) showed the pace of manufacturing growth slowed in the world's second-largest oil consumer.
Asian stocks today fell while the dollar was up almost a third of a per cent against a basket of currencies. The European Central Bank warned yesterday that the region's banks may face a new wave of losses.
US crude for July fell 60 cents to $71.98 a barrel at 0648 GMT, down about 17 per cent from a peak above $87 a month ago. ICE Brent dropped 52 cents to $72.19.
Stronger-than-expected US construction and manufacturing data yesterday temporarily lifted stock markets and oil prices.
The market may take further direction from U.S. inventory reports scheduled for today and tomorrow.
US crude oil inventories were forecast to have slipped by 200,000 barrels last week as refineries increased crude processing and imports eased, a Reuters survey of analysts showed.
For gasoline, the forecast was for a drop of 500,000 barrels as supply was sent to secondary and tertiary sources ahead of the US Memorial Day long weekend, which kick-starts the country's driving season running from late May through early September.
Distillate stockpiles including diesel and heating oil were expected to have gained 300,000 barrels.
The industry group American Petroleum Institute will issue its report a day later today, while government statistics from the US Energy Information Administration will be published tomorrow.
Reuters