Oil prices fell to near $71 a barrel Thursday in Asia, dragged down by signs of faltering U.S. crude demand and concerns the global economic recovery will be anemic.
Benchmark crude for October delivery was down 33 cents to $71.10 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange. On Wednesday it fell 62 cents to settle at $71.43
Oil briefly hit the $75 a barrel level Tuesday but failed to breakthrough the barrier and has been sliding since then.
Investors are cashing out as new government data showed weak demand with crude supplies rising last week in the United States, the world's biggest energy user, said Tetsu Emori, commodity markets fund manager at ASTMAZ Futures Co. in Tokyo.
"Reality is setting in. The latest U.S. data showed that fundamentals in the oil market remains bearish," he said, adding that oil prices could fall below $70 a barrel in the next few days.
The Energy Department reported Wednesday that U.S. crude stockpiles rose by 200,000 barrels for the week ended Aug. 21. The same report a week ago showed a large and unexpected draw on oil, which sent prices soaring.
David Donora, executive director of commodities for London-based Threadneedle, which manages about $80 billion of assets, warned global oil demand could decline over the longer term given anemic economic growth and high oil prices.
He said in a recent report that rising unemployment, high levels of debt, increased savings and low economic growth may cause U.S. oil consumption to dwindle in the next few years.
In other Nymex trading, gasoline for September delivery fell 1.21 cent to settle at $1.9705 a gallon and heating oil fell 1.2 cents to $1.84 a gallon. Natural gas shed 3.9 cents to $2.871 per 1,000 cubic feet.
In London, Brent crude fell 44 cents to $71.21.