Oil Resumes Slump On Economic Gloom After Brief Bounce
NEW YORK, Oct 15 (Reuters) - Oil prices slumped on Wednesday after a brief bounce from four-year lows failed to gain traction, as equity markets tumbled and economic gloom spread.
A sharp fall in the U.S. dollar lent modest support to oil prices early in the day, but the mood turned bearish again by mid-afternoon as traders saw little end in sight for oil's deepest rout in three years. European benchmark Brent has fallen 28 percent since June as OPEC's most influential members see little need to shore up markets by cutting output.
Brent crude for November delivery, which expires on Thursday, settled $1.26 lower at $83.78 a barrel, after trading earlier as low as $83.37, its weakest since 2010. It fell nearly $4 on Tuesday, the biggest drop in three years.
"When the market comes off a day like yesterday, it's going to have rallies back up. It's not a straight line down," said Joseph Posillico, a senior vice president of energy derivatives with Jefferies Bache. "The trends are still down, and I think it's possible that we have a new range between $70 and $80."
U.S. crude ended just 6 cents lower at $81.78 as buyers returned early in the day after the contract hit $80.01, a symbolically important level in a market that has crashed through most lines of major support.
Oil was also whipsawed by gyrations in outside markets, with U.S. stocks falling almost 3 percent and Treasury bills rising 1.5 percent after data showed producer prices fell for the first time in more than a year and retail sales fell.
The dollar index fell almost 1 percent, reversing part of a near 10 percent rally since May that has weighed on commodities.
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