Oil prices have slackened in Asian trading as global markets await the weekly US inventory report expected to continue to show a demand slowdown in the US and augmenting concerns of slackening oil demand from the worlds largest oil consumer.
New York's main contract, light sweet crude for September delivery, dipped further to US$121.77 a barrel. Brent North Sea crude for September delivery slipped to US$122.42 after a more than three dollar drop on Tuesday in London.
The major factors contributing to the oil price slump are stronger US dollar and worries about slackening oil demand in the United States, and bearish sentiments that have prompted some investors to move their funds out of oil. A stronger dollar makes crude oil more expensive for buyers with weaker currencies. The market's pessimistic outlook was demonstrated minimum effect of news that Royal Dutch Shell has suspended some crude deliveries after militants sabotaged a pipeline in key oil producer Nigeria. In fact, the company has declared "force majeure" for the remainder of July, August and September.