Oil prices fall deepens on demand concerns

SINGAPORE, July 28 (Commodity Online): Global oil prices extended losses and dropped below $77 a barrel in early Asian trade Wednesday mainly on an unexpected increase in US crude stockpiles.

Light sweet crude for September delivery was seen trading at $77.16 a barrel at 11.30 am Singapore time after hitting as low as $76.88 a barrel in early trade.

London's ICE Brent crude was seen at $75.90 a barrel at the same time. Analysts said a drop in US consumer confidence that hit energy demand recovery was also responsible for oil's downfall.

US crude inventories posted a surprise increase of 3.1 million barrels last week as against a forecast of decline by 1.6 million barrels, said American Petroleum Institute Tuesday.

US Department of Energy will release its report later Wednesday. On Tuesday, oil prices tumbled after touched an 11-week high of $79.69 a barrel.

New York's main contract, light sweet crude for delivery in September, slipped $1.48 to $77.50 a barrel while London's Brent crude for September lost $1.37 to $76.13 a barrel.

Although predictions of an active hurricane season have not materialised yet, occasional threats, like that from Tropical Storm Bonnie last week, have helped support prices.

With the season lasting into the fall, concern about disruptions to oil and gas production in the Gulf of Mexico have not vanished.