Mubasher: Oil prices slumped around 7% on Tuesday, with US Nymex sliding to its lowest since more than a year, as a broader Wall Street sell-off was fuelled by mounting concerns about global economic growth slowdown.
By 8:47 pm GMT, US Nymex futures plunged 6.82% to $53.30 per barrel (pb), while Brent crude futures fell 6.74% to $62.29 pb.
US Nymex crude dropped as much as 7.7% earlier in the session, marking the lowest level since October 2017 while global benchmark Brent fell as much as 7.6%, the lowest since December 2017.
Tuesday’s drop extended a slump that has been largely uninterrupted since early October. US Nymex futures plunged 30% from their almost four-year highs earlier last month, while Brent futures lost around 28% dragged down by surging supply and selloff in risk assets.
The S&P 500 index hit a three-week trough on Tuesday as weak earnings and forecasts from large retailers fed worries about holiday season sales, while tech stocks continued to slip on concerns about iPhone sales.
Over the past two months, global equity markets endured a shakeout, on the pressure from fears of a peak in corporate earnings growth, interest rate hikes, slowing world’s economic growth and international trade tensions.
Investors have become more cautious about oil markets, expecting further downside risk to prices from growing US shale production as well as gloomier economic outlook.
In addition, expectations of a ninth consecutive week of US crude stockpile build-up weighed on prices. Analysts polled by Thomson Reuters expected a rise of 2.9 million barrels during last week.
US crude output surged 25% this year to a record high of 11.7 million barrels per day (bpd).
This came as the Organization of Petroleum Exporting Countries (OPEC) was pushing for withholding supplies by a range from 1 million bpd to 1.4 million bpd at its meeting slated for 6 December.
However, the International Energy Agency (IEA) executive director Fatih Birol warned OPEC and other oil producers against the “negative implications” of supply curbs, amid concerns that a surge in crude prices could dampen consumption.
“We are entering an unprecedented period of uncertainty in oil markets,” Birol said.
