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Oil Prices Plunge Further on Bearish Crude Inventories - Oil prices sank further into negative territory on Wednesday after weekly data on U.S. crude inventories gave bearish signals for demand and production.

The Energy Information Administration said in its regular weekly report that crude oil inventories increased by 1.58 million barrels in the week to August 9.

Although senior commodity analyst Barani Krishnan noted the unexpected drawdowns in gasoline and distillates, he emphasized the second-straight surprise build in oil stockpiles as worrying for bulls.

“It suggests a problem for demand going forth, despite the strong refinery runs now and product draws,” Krishnan said, adding that U.S. output showed no signs of easing, holding north of 12 million barrels per day.

“We have just about three weeks left for peak driving demand into Labor Day and everyone's going to be asking 'What happens after that?'”

Crude was volatile following the report, but bears took back full control by 11:13 AM ET (15:13 GMT), extending losses.

WTI futures slumped 4.6% to $54.46 a barrel, compared to $55.20 prior to the publication, while London-traded Brent crude futures sank 4.2% to $58.73 a barrel, compared to $59.27 ahead of the release.

Oil had already been plummeting ahead of the release as weak economic data released overnight, along with an inversion of the U.S. Treasury yield curve, stoked concerns over a global recession that would reduce demand for oil.

Data released earlier showed that Chinese industrial output growth hit its lowest level in 17 years, while the German economy contracted in the second quarter. Analysts highlighted both data points as signs of the negative impact from trade conflicts, especially the U.S.-China dispute.

The yield on the U.S. 10-year Treasury note fell below that of the 2-year note, inverting the yield curve for the first time since 2007. Some economists consider the yield curve inversion to be an early indicator of a recession.

Aside from Wednesday’s slide, oil has been dogged by volatility this month as crude reacts to trade and economic news.

“Oil prices are experiencing some of their greatest volatility ever as the U.S.-China trade war yanks crude around like a yo-yo,” Krishnan said, suggesting that the current “rollercoaster ride” may be far from over.

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