Benchmark West Texas Intermediate crude for November delivery dropped 47 cents to finish at US$102.66 a barrel on the New York Mercantile Exchange. That's the lowest closing price since July 3.
Oil has fallen seven per cent since closing at a two-year high of $110.53 on Sept. 6. Since then, diplomatic efforts have averted a U.S. military strike against Syria, and tensions between the U.S. and Iran have shown signs of a thaw. As a result, the market has removed the so-called risk premium from oil, which some analysts put at about $5 to $6 a barrel.
On Wednesday, there were signs of a slowdown in demand for oil and fuel following the end of the summer driving season. The Energy Department said that U.S. crude oil supplies increased by 2.6 million barrels, while gasoline supplies rose 200,000 barrels in the week ended Sept. 20.
Analysts expected supplies of both oil and gasoline to drop. The increase in supplies came as refineries pulled back from a strong pace in the late summer.
On the economic front, reports showed Americans stepped up purchases of new homes in August after cutting back in July, while companies placed slightly more orders in August for U.S. long-lasting manufactured goods. The increase in home sales suggested that higher mortgage rates are not yet slowing the housing recovery.
Still, investors remained cautious as Congress and the White House gear up for another budget fight. Failure to reach an agreement could make it impossible for the government to pay some of its bills.
In other markets, Brent crude, the benchmark for international crudes used by many U.S. refineries, slipped 32 cents to US$108.32 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex: wholesale gasoline rose one cent to US$2.67 a U.S. gallon (3.79 litres), heating oil rose one cent to US$2.97 a gallon and natural gas was flat at US$3.49 per 1,000 cubic feet.
(TSX:ECA), (TSX:IMO), (TSX:SU), (TSX:HSE), (NYSE:BP), (NYSE:COP), (NYSE:XOM), (NYSE:CVX), (TSX:CNQ), (TSX:TLM), (TSX:COS.UN), (TSX:CVE)