Oil Slumps With Equities as Concerns Rise Over Inventories
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Oil fell sharply as an industry report showed a rise in U.S. crude stockpiles and stock markets in Europe came under pressure.
Crude futures in New York fell 3.9%, while those in London retreated beneath $40 a barrel, the lowest since Oct. 5. European and U.S. equity markets also declined, while the dollar was stronger, souring oil sentiment on Wednesday.
That came after the American Petroleum Institute reported crude inventories expanded by 4.58 million barrels last week, while gasoline stockpiles rose for a second straight week, according to people familiar with the data. Official government figures are due later on Wednesday.
Oil is falling as coronavirus cases climb across Europe and the U.S. France and Germany are both readying more virus controls, in the latest potential blow to European consumption. The market is also facing rising supply from Libya, which is eroding some of the stock draws that were expected in the fourth quarter. It means OPEC+ has some tough decisions to make on the path forward for its output curbs next month.
“The path of least resistance for crude prices is downward,” said Vandana Hari, founder of Vanda Insights in Singapore.
U.S. gasoline inventories expanded by 2.25 million barrels last week, while crude supplies at the key storage hub of Cushing climbed by 136,000 barrels, according to the API. The median estimate in a Bloomberg survey forecast nationwide crude stockpiles increased by 1.5 million barrels
Meanwhile, Libya is ramping up production quicker than anticipated after reopening the last of its oil fields and ports following a truce in a years-long civil war. Daily crude output has surged from less than 100,000 barrels in early September to almost 700,000 barrels as of Monday, and may rise to more than 1 million barrels a day by mid- to late-November.
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— With assistance by James Thornhill
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