Oil Drops Amid Broader Selloff as Fed Points to Global Risks
(Bloomberg) -- Oil dropped for a second day after the U.S. Federal Reserve left borrowing costs unchanged because of concern about recent global economic turmoil.
Futures fell as much as 3.5 percent in New York, extending a decline of 0.5 percent on Thursday. European equities and industrial metals also slid after the Fed said recent global developments may restrain economic activity.
Oil is down more than 24 percent from this year’s closing peak in June amid a global oversupply that Goldman Sachs Group Inc. predicts may keep prices low for the next 15 years. U.S. crude inventories decreased through Sept. 11 as output slid a sixth week, government data showed.
“The equity market in Europe is down and that’s weighing on the oil market today,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, said by phone. “There are signs the oil surplus is reducing and that’s a positive for the market.”
West Texas Intermediate for October delivery slid as much as $1.64 to $45.26 a barrel on the New York Mercantile Exchange, and traded at $45.39 at 2:07 p.m. London time. The contract lost 25 cents to $46.90 on Thursday. Prices gained 1.7 percent this week, set to rise for the third time in four weeks.
Brent for November settlement dropped 69 cents to $48.39 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 0.4 percent this week. The European benchmark crude traded at a premium of $2.65 to WTI.
“Prices have run up recently and there’s a feeling it may have been a little premature,” Weinberg said. “Some investors are probably taking chips off the table today.”
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