Oil Slides Again as Economy Falters
(Bloomberg) -- Oil fell again as a deteriorating outlook for the global economy weighed on demand, while estimates of increased American crude stockpiles suggested that supplies remain abundant.
Futures fell as much as 2.2% in New York after declining the same amount on Monday. Investor confidence remained weak in Germany amid concern the nation has slipped into recession, while the ongoing struggle between the U.S. and China to hammer out even a limited trade deal prolonged fears their trade war will crimp growth. U.S. inventories rose by 3.1 million barrels last week, according to the median estimate in a Bloomberg survey before official data due on Thursday.
“Concerns over the fallout of a negative outcome of these negotiations on the global economy and thus oil demand are running high,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.
Even if the U.S. and China manage to agree on the partial deal, it’s unlikely to have a major impact on slowing economic growth as existing tariffs won’t be rolled back. The International Energy Agency last week trimmed forecasts for oil consumption for this year and 2020 amid the deteriorating economic backdrop. Disappointing economic data from Germany on Tuesday added to the concerns.
West Texas Intermediate for November delivery fell $1.07, or 2%, to $52.52 a barrel on the New York Mercantile Exchange as of 10:43 a.m. in London. It dropped $1.11 on Monday, wiping out most of Friday’s $1.15 increase.
Brent crude for December settlement declined $1.24, or 2.1%, to $58.11 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $5.51 a barrel to WTI for the same month.
“It’s clearly a market that is very macro-focused right now,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S in Copenhagen. “Speculators have been quite aggressive sellers during the past couple of weeks.”
American crude stockpiles rose by 9.5 million barrels over the four weeks through Oct. 4, according to Energy Information Administration data. If they expanded again last week, that would be the longest run of gains since February.
--With assistance from James Thornhill and Dan Murtaugh.
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