Oil prices retreat after factory output falls in Japan

By Ovunc Kutlu

ANKARA (AA) * Crude oil prices began lower on Thursday after Japan posted its largest decline in factory output in a year resulting in weaker crude demand with potential economic slowdown in the world's fourth biggest oil consumer.

Japan, the world's third largest economy, saw its factory output contract by 3.7 percent in January, its biggest decline in a year, according to the Ministry of Economy, Trade and Industry on Thursday.

The contraction shows that U.S.-China trade tensions and weaker growth in China have begun to negatively impact Japan - the world's fourth biggest oil consumer after the U.S., China and India.

Experts foresee that weak factory output in Japan could bring down the overall crude demand of the country and push oil prices lower in the long run.

International benchmark Brent crude was down 0.3 percent to trade at $66.30 per barrel at 0655 GMT on Thursday, after closing the previous day at $66.52 a barrel.

American benchmark West Texas Intermediate (WTI) was at $56.77 a barrel at the same time for a 0.4 percent loss, after ending Wednesday at $56.99 per barrel.

Brent gained 2 percent and WTI jumped 2.7 percent on Wednesday after the U.S.' commercial crude oil inventories declined against market expectations.

Commercial crude oil stocks in the U.S. defied expectations of a 2.8 million barrel increase and instead decreased by 8.6 million barrels for the week ending Feb. 22, according to the U.S.' Energy Information Administration (EIA) on Wednesday.

The EIA data also revealed that the U.S.' crude oil production reached a new record high level of 12.1 million barrels per day for the week ending Feb. 22, which could put some downward pressure on oil prices with oversupply concerns in the global oil market.