NEW YORK (Reuters) – Oil prices slumped to more than two-week lows on Thursday as global stock markets fell, with investor sentiment made more bearish by a bigger-than-expected U.S. crude inventories build.
FILE PHOTO: An oil and gas drilling platform stands offshore in the Gulf of Mexico in Dauphin Island, Alabama, U.S., October 5, 2013. REUTERS/Steve Nesius/File Photo
Brent crude LCOc1 futures fell $2.10, or 2.5 percent, to $80.99 a barrel, by 12:55 p.m. EDT (1655 GMT), after hitting a low of $80.69, its weakest since Sept. 24. The global benchmark has retreated after hitting a four-year high of $86.74 on Oct. 3.
West Texas Intermediate (WTI) crude CLc1 futures fell $1.76 to $71.41 a barrel, a 2.4 percent loss. WTI hit a session low of $71.08, the lowest since Sept. 21.
U.S. crude inventories USOILC=ECI rose 6 million barrels last week, the Energy Information Administration said, more than double analysts’ expectations of a 2.6 million-barrels increase. [EIA/S]
The stockpiles rose for the third consecutive week as refineries continued to reduce production for seasonal maintenance. Refinery crude runs USOICR=ECI fell by 352,000 barrels per day as utilization rates USOIRU=ECI dropped 1.6 percentage points, the EIA data showed.
“It was a mostly bearish report. The large increase in overall crude oil inventories and a decent-sized increase at the Cushing, Oklahoma, delivery hub is a negative for prices, as it eases some of the supply crunch worries that have crept into the market,” said John Kilduff, a partner at Again Capital Management in New York.
Falling U.S. equity markets and a global risk-off environment also weighed on crude futures. On Wednesday, U.S. stock markets tumbled, with the S&P 500 and the Dow Industrials indexes posting their worst day in eight months, as solid economic data reinforced expectations of multiple interest rate hikes over the next year.
“The demand side of the oil equation is always much more difficult to discern than the more transparent supply side and as equities slide amidst rate increases, the oil market could begin to discount a worst case scenario with regard to oil demand expectations,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
The Organization of the Petroleum Exporting Countries cut its forecast of global demand growth for oil next year for a third straight month, citing headwinds facing the broader economy from trade disputes and volatile emerging markets.
In the U.S. Gulf of Mexico, producers were checking production platforms and beginning to return crews to more than 90 offshore facilities evacuated this week as Hurricane Michael moved through the Gulf.
Production shut-ins that temporarily halted 42 percent of Gulf oil output was restarting in some areas.
Michael crashed ashore Florida on Wednesday as the third most powerful hurricane ever to strike the U.S. mainland. It has since weakened to a tropical storm.
Reporting by Stephanie Kelly in New York, Christopher Johnson in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy