Mubasher: Oil prices hit two-week lows earlier on Thursday, extending their losses from their earlier sessions as industry figures indicated a rise in US crude inventories and global stock markets went bearish.
Moreover, concerns eased over a likely significant damage from Hurricane Michael to oil assets as the storm smashed into Florida.
At 6:24 am GMT, US Nymex crude dropped 1.2% to $72.26 per barrel (pb) from its earlier session, hitting its lowest since 27 September when it shed 2.4%, as international benchmark Brent crude slid 1.4% to $81.94 pb, the steepest level seen since the same day when it closed 2.2% lower.
US crude stockpiles saw by a higher-than-expected rise of 9.7 million barrels over the week ended 5 October to 410.7 million, the American Petroleum Institute (API) said on Wednesday. Analysts expected them to rise just by 2.6 barrels.
The Energy Information Administration (EIA) is due to release its official data pertaining to the US crude inventories later in the day.
In addition, Asian share markets suffered a drubbing after Wall Street saw its worst rout in eight months, which would threaten business sentiment and investment all over the world.
“The clear risk-off mode that we are seeing across all markets is also hitting oil and those previous supply concerns have simply evaporated,” CMC Markets senior market strategist Sydney-based Michael McCarthy told Thomson Reuters.
Volumes for Brent contract exceeded the average for the Asian time zone four times, while US contract were about 75% above typical turnover, McCarthy said.
With that, “there is a real commitment in the selling […] adding to the idea that we are seeing a turn in the market,” he concluded.
In addition, producing companies in the US Gulf of Mexico trimmed daily oil output by nearly 42% due to the incoming Hurricane Michael, the Bureau of Safety and Environmental Enforcement said.
The slashed amount represented 718,877 barrels per day (bpd).
However, “down time is expected to be brief and Gulf of Mexico output now accounts for a comparatively small portion of total US production,” Ritterbusch and Associates president Jim Ritterbusch said in a note.
By 7:51 am GMT, Nymex crude futures fell 1.09% to $72.37 pb, while Brent futures slipped 0.92% to $82.17 pb.