Investing.com - U.S. oil futures fell to the lowest level in six-and-a-half years on Monday after data showing that Japan’s economy contracted in the second quarter added to fears over the demand outlook.
U.S. crude futures for September delivery dropped 1.7% to $42.36 a barrel, the lowest level since March 2009.
On the ICE Futures Exchange in London, the October Brent contract was down 1.55% to $48.42 a barrel, also the weakest since March 2009.
Data on Monday showed that Japan’s gross domestic product contracted by 0.4% in the three months to June and was down 1.6% on a year-over-year basis.
The contraction was slightly smaller than forecast, but added to fears that slowing growth in Asian economies will weigh on the demand outlook for oil.
Oil prices were also hit by fears that Chinese demand for oil will drop after the country devalued its currency in a surprise move last week, as a weaker yuan would make imports more expensive.
On the supply side, industry research group Baker Hughes (NYSE:BHI) said late Friday that the number of rigs drilling for oil in the U.S. increased by two last week to 672, the fourth straight weekly gain.
The uptick in the rig count supported expectations that U.S. producers will ramp up activity in the coming months.
Data earlier in the week showed that while U.S. crude-oil stockpiles were lower for the third straight week, the extent of the decline was less than had been forecast.
Global oil production is outstripping demand following a boom in U.S. shale oil production and after a decision by the Organization of Petroleum Exporting Countries last year not to cut production