LONDON: Oil prices fell on Thursday as Asian and European stock markets plunged in the wake of Wall Street’s biggest daily decline since 2011, with investors shedding risk in an uncertain political landscape.
Brent crude oil LCOc1 fell 82 cents, or 1.1 per cent, to a low of $75.35 before recovering a little to trade at $75.87 by 0900 GMT. The global benchmark has lost more than $10 a barrel since hitting a high of $86.74 on October 3.
US light crude CLc1 was 30 cents down at $66.52.
“The market looks negative with lower numbers likely,” said Robin Bieber, technical analyst at London brokerage PVM Oil.
“Expect spirited rallies,” Bieber said, adding that he considers such spikes as selling opportunities.
Financial markets have been hit hard by a range of worries, including the US-China trade war, a rout in emerging market currencies, rising borrowing costs and bond yields, as well as economic concerns in Italy.
Weakness is also starting to show in container and dry-bulk rates, both of which have declined significantly in October, pointing to a slowdown in global trade.
Despite the global sell-off, oil markets are supported by concerns over the impact of US sanctions on Iranian crude exports, which kick in from November 4.
Bowing to pressure from Washington, Chinese oil majors Sinopec and China National Petroleum Corp (CNPC) have yet to buy any oil from Iran for November because of concerns that sanctions violations could hurt their operations.
China is Iran’s biggest oil customer. Halting oil Iranian imports means that China’s many refiners will have to seek alternative supplies.
However, global supplies appear to be adequate and inventories are rising in some regions, particularly in the United States, where oil production is near a record high.
US commercial crude oil stockpiles C-STK-T-EIA rose for a fifth consecutive week last week, increasing by 6.3 million barrels to 422.79 million barrels, the Energy Information Administration said on Wednesday.
US oil production C-OUT-T-EIA remained unchanged at 10.9 million barrels per day (bpd) last week, slightly below a record 11.2 million bpd reached at the start of October. — Reuters
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