Crude oil futures ended the day at their lowest level since August on Wednesday as investors took fright at a weaker than expected consumer sentiment report in China.

Concern about deteriorating demand from the world's second largest economy sent crude for November delivery down $3.75 or 4.1% at $88.14 a barrel on the New York Mercantile Exchange.

As well sluggish data from China, traders were also unnerved by mostly weak data from Europe. Markit Economics' service sector PMIs (purchasing managers indices) showed that the recession in Europe continued during the month of September.

Otherwise traders mostly overlooked encouraging weekly supply data from the Energy Information Administration.

The EIA showed stockpiles of crude fell 500,000 barrels in the week ended September 28th confounding expectations of a rise of 1.5m barrels. Gasoline supplies rose 100,000 barrels while inventories of distillates fell 3.7m barrels. Most analysts had predicted gasoline stocks to stay unchanged and distillates to fall 400,000 barrels in the week.

On the ICE futures exchange Brent crude dropped $3.40 or 3% to $108.17 a barrel.

Gold shrugged off a weak start to the session on Wednesday, to squeeze out a 0.2% gain as investors cheered a positive US services report.

Gold for December delivery advanced $4.20 to settle at $1,779.80 an ounce on the Comex division of the New York Mercantile Exchange.

Palladium and platinum perked up on reports that workers at an iron-ore mine in South Africa walked out following a dispute about pay.

December palladium settled up $3.70 at $657.90 an ounce while January platinum firmed $6.90 to $1,694.10 an ounce.


CJ

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