Investing.com -- Oil prices fell Thursday after U.S. growth concerns as well as higher inventories and record production in the United States overshadowed worries of global trade disruptions in the Red Sea (NYSE:SE).
By 09:00 ET (14.00 GMT), the U.S. crude futures traded 1.6% lower at $73.01 a barrel and the Brent contract dropped 1.6% to $78.44 a barrel.
U.S. economic growth slows
U.S. economic growth was revised lower in the third quarter, with data showing the country’s gross domestic product rose 4.9% from the previous quarter, lower than the previous estimate of 5.2%.
Additionally, the Philadelphia Fed’s manufacturing index fell to -10.5 in December, a drop from -5.9 the prior month, while weekly unemployment benefit claims rose to 205,000 last week.
These numbers suggest economic activity could be slowing in the final quarter of the year, pointing to falling demand for energy, and thus crude.
Record U.S. crude production weighs
U.S. inventories grew 2.9 million barrels in the week to Dec. 15, according to data from the Energy Information Administration, released Wednesday. This was surprising given expectations for a draw of 2.3 million barrels, while a bigger-than-expected build in both gasoline and distillate inventories also pointed to cooling fuel demand.
Additionally, the EIA said U.S. crude output rose to a record 13.3 million barrels per day, up from the previous all-time high of 13.2 million barrels.
The data ramped up concerns of over-supplied oil markets in 2024, especially after the recent production cuts from the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, were received in a lack-luster manner given their voluntary nature.
Oversupply concerns had resulted in oil prices falling to five-month lows at the beginning of December.
“U.S. crude oil is shaping up as the biggest reason for the moderation in oil prices this year. With its main markets in Europe and Asia, exported crude from the world's top producer has proved a useful lever for keeping a lid on benchmarks even as Saudi Arabia and Russia reduced their production, especially the former,” according to OilPrice.com, in a note.
Concerns of disruptions to supply through Red Sea remain
This data has overshadowed the ongoing concerns of disruptions to the global supply of crude through the Red Sea and Suez canal following the missile and drone attacks on ships in the Red Sea by the Iran-aligned Yemeni Houthi militant group.
Around 12% of world shipping traffic passes through the Suez Canal, heading mostly from the Mediterranean to the important Asian market.
The United States has announced the creation of a multinational naval task force to defend commerce in the region, but the Houthis have vowed to continue their attacks, which they claim is in support of the Palestinians in Gaza.
The Israel-Hamas war so far has had little impact on oil supplies, but traders remain on edge over the conflict drawing in more Middle Eastern powers, which could tangibly disrupt supplies from the oil-rich region.
(Ambar Warrick contributed to this article.)