September crude oil futures (WTI) traded at $77.72 a barrel on Thursday morning, representing a 5.2% decline on the week.
Crude oil fell on the back of growing evidence of a slowdown in global economic growth and renewed fears of a double dip recession in economies in the West. Earlier this week the US Federal Reserve and the Bank of England lowered their economic growth forecasts, while China unveiled a slowdown in import growth and industrial production for July. This news, coupled with downbeat remarks from the International Energy Agency (IEA), which warned that oil demand could take a substantial hit should economic growth falter, hit crude oil hard. On Wednesday, the IEA revised slightly upwards its forecasts for global oil demand for 2010 and 2011, but warned that there is a significant downside risk to its estimates if the economic recovery fades in the second half of the year.
Reports showing a rise in energy stockpiles weighed on crude oil as well. On Wednesday the US government’s Energy Information Administration (EIA) reported that gasoline inventories rose 409,000 barrels to 223.4 million last week, exceeding the 250,000 barrel increase shown in a Bloomberg survey. This was the seventh straight rise. Supplies of distillate fuel, a category that includes heating oil and diesel, rose by 3.46 million barrels to 173.1 million. Analysts surveyed by Bloomberg were expecting a 1.75 million-barrel increase. Crude oil stockpiles were better than expected, nevertheless, declining by 2.99 million barrels to 355 million last week, bigger than expectations for a 2 million-barrel dro
