Oil fell below $134 a barrel today, extending a $2 drop in the previous session after US government data showed a surprise rise in domestic crude stocks, fuelling concerns of a demand slowdown in the world's largest energy consumer.
US light crude for August delivery fell 73 cents to $133.82 a barrel by 6.47am, bringing total losses since yesterday to over $3. London Brent crude fell 68 cents to $133.65.
Surging oil prices, which struck a record near $140 a barrel last week, have weighed on the economies of consuming nations.
Many Asian countries, including China, have moved to cut fuel subsidies, prompting worries of a sharp slowdown in oil demand.
US crude oil inventories rose for the first time in six weeks, by 800,000 barrels to 301.8 million barrels, in the week to June 20th, the Energy Information Administration reported, countering expectations of a drop.
The build came as US gasoline demand, which has fallen as high fuel prices forced motorists to adjust their driving habits, dipped 2.1 per cent over the past four weeks compared with year-ago levels.
Analysts said the market will also eye US economic indicators to have a better gauge of how the economy of the world's largest oil consumer is faring.
On the supply side, US oil major Chevron Corp delayed some exports of Escravos crude oil in Nigeria after armed youths blew up a supply pipeline last week.
Analysts said instability in Nigeria and simmering tensions between Israel and Iran over Tehran's nuclear programme would continue to offer support to oil prices.