Oil plummets as tropical storm threat subsides

NEW YORK Oil took a downward turn as concerns eased about tropical storm Nate’s threat to offshore crude platforms and coastal refineries while prices broke through a key technical barrier.

Futures slipped three per cent in New York, bringing this week’s decline to the steepest since May. While BP Plc, Chevron Corp. and other explorers cleared workers from the Gulf of Mexico and refiners in Louisiana braced for Nate to make landfall, forecasters don’t expect the storm’s strength or track to menace most energy infrastructure. Meanwhile, the U.S. benchmark closed below its 200-day moving average, a key technical level.

Nate is expected to veer “away from generally the bulk of production, so you have the corresponding pullback here” in prices, said Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York. Meanwhile, traders who focus on chart movements and other technical analysis interpreted crude’s drop through its 200-day moving average as a “sell signal.”

Oil’s brief rally into bull-market territory last month is fading from memory amid an OPEC-led effort to whittle away a global glut stretching back to late 2016. Output from the Organization of Petroleum Exporting Countries increased last month and Libya restarted its biggest oilfield. Meanwhile, U.S. crude output reached a two-year high in the most recent government data.

The U.S. still has a supply overhang that needs to be worked off and on top of that, the world’s biggest economy is entering a season of the year when fuel demand typically weakens, Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors LLC, said in a telephone interview. “I wouldn’t call it a glut but I would definitely call it still oversupplied.”