Crude oil prices sink 2% as Wall Street slides
NEW YORK — Oil prices dropped 2% on Wednesday as US equity markets broadly fell, even though energy traders worried about shrinking Iranian supply from US sanctions and kept an eye on Hurricane Michael, which closed some US Gulf of Mexico oil output.
NEW YORK — Oil prices dropped 2% on Wednesday as US equity markets broadly fell, even though energy traders worried about shrinking Iranian supply from US sanctions and kept an eye on Hurricane Michael, which closed some US Gulf of Mexico oil output.
Brent crude futures fell $1.91, or 2.3%, to settle at $83.09 a barrel. The global benchmark posted a 1.3% gain on Tuesday.
US West Texas Intermediate (WTI) crude futures fell $1.79 to settle at $73.17 a barrel, a 2.4% loss.
Oil prices extended losses in post-settlement trade when industry group the American Petroleum Institute reported that crude inventories rose by 9.7 million barrels in the week to Oct. 5 to 410.7 million, more than four times the 2.6 million barrel build analysts had expected.
The US Energy Information Administration is due to release official government inventory data Thursday at 11 a.m. EDT.
Oil prices fell as US stock markets skidded on Wednesday, with the S&P500 stock index marking its biggest one-day fall since February. Rising US Treasury yields and trade policy worries sparked the sell-off on Wall Street.
Risks to the global financial system have risen over the past six months and could increase sharply if pressures in emerging markets escalate or global trade relations deteriorate further, the International Monetary Fund (IMF) said.
On Tuesday, the IMF cut its global economic growth forecasts for 2018 and 2019, raising concerns that demand for oil may also slump.
Prices fell despite worries about supply as Hurricane Michael made landfall in Florida. In the US Gulf of Mexico, producers have cut daily oil production by roughly 42% due to the storm, the Bureau of Safety and Environmental Enforcement said. The cuts represent 718,877 barrels per day of oil production.
While crude output has been cut because of the hurricane, “down time is expected to be brief and Gulf of Mexico output now accounts for a comparatively small portion of total US production,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
Worries about crude supply from the Middle East have given prices some support.
Iran’s crude exports fell further in early October as buyers sought alternatives ahead of US sanctions that take effect on Nov. 4, according to tanker data and an industry source. —