Oil prices fall on weak demand

Oil prices fell sharply on Wednesday as economic data from China and Europe sparked worries about global demand.

Brent crude for November delivery fell $3.40 to $108.17 a barrel, while US crude settled $3.75 lower at $88.14 a barrel.

In September, Brent crude hit a peak of $117.95, a four-month high.

Analysts said many factors that had pushed up prices, such as tensions between Iran and Israel, had also abated.

“The energy markets realigned themselves to fundamentals last night in dramatic fashion,” said Justin Harper from IG Markets in a note to clients.

Data from China, released on Wednesday, was one of the factors that led to the sell-off in oil and other commodities.

It showed that China’s services sector expanded at a slower pace in September. It came days after government data indicated that manufacturing continues to slow.

China is a major importer of commodities and a slowdown there makes a huge dent in demand.

That coupled with weakness in European economies signaled that there would be plenty of supply.

“US crude plummeted 4.1% through a combination of over-supply and low demand,” said Justin Harper.

“US stockpiles have reached their highest for 15 years.”

Meanwhile, concerns over possible military action between Israel and Iran also eased.