Oil prices plunged about 5 percent on Tuesday to two-month lows as a sell-off in global equity markets raised worries about demand growth and after Saudi Arabia said it could supply more crude quickly if needed, easing concerns ahead of U.S. sanctions on Iran.
Oil prices plunged about 5 percent on Tuesday to two-month lows as a sell-off in global equity markets raised worries about demand growth and after Saudi Arabia said it could supply more crude quickly if needed, easing concerns ahead of U.S. sanctions on Iran. Brent crude futures fell 4.3 percent, or $3.39, to settle at $76.44 a barrel after plunging 5 percent to $75.88, the lowest since Sept. 7. U.S.
crude ended the session at $66.43 a barrel, down $2.93, after falling 5.2 percent to a session low of $65.74, the lowest level since Aug. 20. If U.S. crude drops below $65, a psychologically important figure, that could trigger further technical selling, traders said.
Both contracts notched the biggest percentage drop since July. In post-settlement trade, prices extended losses as data from the American Petroleum Institute (API) showed a large increase in U.S. crude inventories. “The severity of the drop is pretty striking, but in today’s trading world we have these kind of days a little more often. Now we have to wait and see if this continues to spiral out of control,” said Gene McGillian, vice president of market research for Tradition Energy in Stamford, Connecticut.
Oil followed Wall Street’s early sell-off, founded on worries over profit growth and concern about Italy’s budget that have sent investors scrambling out of stocks of late. MSCI’s gauge of stocks across the globe at one point shed more than 2 percent and hit its lowest point since September 2017.
“Concerns about what’s going on in the stock markets and the worries about economic growth has spilled over into the oil markets,” McGillian said, adding that investors will be watching closely to see if the increase in Saudi Arabia’s output materializes quickly.
Saudi Energy Minister Khalid al-Falih told a conference in Riyadh the oil market was in a “good place” and he hoped oil producers would sign a deal in December to extend cooperation to monitor and stabilize the market.
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