Oil slumps 6% as equities slide feeds concerns about demand

NEW YORK — Oil prices tumbled more than six percent on Tuesday in heavy trading volume, with US crude diving to its lowest level in more than a year, caught in a broader Wall Street sell-off fed by mounting concerns about a slowdown in global economic growth.

US West Texas Intermediate (WTI) crude futures ended the session down $3.77, or 6.6%, at $53.43 per barrel. The contract fell as much as 7.7% during the session to touch $52.77 a barrel, the lowest since October 2017. More than 946,000 front-month WTI contracts changed hands, exceeding the daily average over the last 10 months and the second-highest daily volume since June, according to Refinitiv data.

Brent crude futures fell $4.26 or 6.4% to settle at $62.53 a barrel. The international benchmark fell as much as 7.6% to $61.71 during the session, the lowest since December 2017.

Oil’s slide has been largely unimpeded since early October when WTI prices were near fouryear peaks. Since then, WTI has fallen more than 30%.

“For the time being it’s more about risk,” said Jim Ritterbusch, president of Ritterbusch and Associates. “When the stock market comes off 8 or 9%, it tends to conjure up images of a weak global economy and that feeds into expectations of weakerthan-expected oil demand.”

The S&P 500 index on Tuesday hit a three-week low as weak results and forecasts from big retailers fanned worries about holiday season sales, while tech stocks slid further on concerns about iPhone sales.

Global stock markets have slumped in the past two months on worries about corporate earnings, rising borrowing costs, slowing global economic momentum and trade tensions.

Traders see further downside risk to oil prices from growing US shale production and a deteriorating economic outlook.

Macro-focused funds and commodity trading advisory (CTA) firms have pulled back positions in recent weeks as the sell-off has accelerated, market participants said.

According to Credit Suisse, prior to oil’s sell-off in early October, macro/discretionary funds and CTAs held a net long position that ranked in the top decile over the past five years. As of Monday, those funds were balanced between long and short positions as traders sold long positions and funds shifted to the sidelines.

Expectations for a ninth straight week of US crude inventory increases also weighed on prices. Analysts polled ahead of weekly data forecast crude stocks rose about 2.9 million barrels last week.

Oil prices pared losses briefly after data from industry group the American Petroleum Institute showed crude inventories fell by 1.5 million barrels last week to 439.2 million.

US crude production has soared almost 25% this year, to a record 11.7 million barrels per day (bpd).

The Organization of the Petroleum Exporting Countries is pushing for a supply cut of 1 million bpd to 1.4 million bpd when it meets on Dec. 6. —