Amid stirred up fears that the global economy is weakening and the U.S. economic recovery is faltering, oil futures have dropped.
Crude oil for September delivery declined 4.5% in midday trading, dropping down to $87.84, reported Bloomberg.
Brent crude dropped 3.4% to $109.44 on the London-based ICE Futures for September delivery.
This has been propelled heavily by fears that the U.S. economic recovery has hit a plateau and that demand is declining.
And that may very well be true.
Because huge increases in natural gas and gasoline inventories have been occurring lately in what is usually the season of highest demand.
Natural gas supplies, according to the Energy Information Administration (EIA), were expected to increase between 32 billion and 41 billion cubic feet last week, but instead increased 44 billion cubic feet, the Wall Street Journal’s “Market Watch” reports.
That could be cause for the 3.6% drop natural gas futures for September delivery seen today.
And gasoline dropped 4.9% today.
Stockpiles for gasoline have increased 1.7 million barrels, “Market Watch” says.
This overflow of resource is in part due to the fact that, as analysts at Commerzbank said, “(I)f we look at gasoline demand in the past four weeks, this is still 3.6% lower than the same period last year.”
Again, this is during the height of summer, peak driving and travel season in the United States.
Many oil and gas companies saw market declines today, including Marathon Oil Corp (NYSE: MRO), which was down 6.3% this afternoon.
Others were down as well, including Exxon Mobil Corp (NYSE: XOM), which was down 3.3%, Chevron Corp (NYSE: CVX), which dropped 4.4%, and Royal Dutch Shell (LON: RDSA), which was down 4.6%.
And oil isn’t the only thing dropping.
According to Bloomberg, the market saw a decline in all 24 commodities on the S&P GSCI Index. The Index dipped 3%.
That’s all for now,