Oil prices pulled down by global stock market plunge

Friday, 26 October 2018 00:01 - - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters): Oil prices fell on Thursday as Asian shares plunged in the wake of Wall Street’s biggest daily decline since 2011, while spreadbetters pointed to a subdued start for European markets.

Front-month Brent crude oil futures were at $75.82 a barrel at 0656 GMT, down 35 cents, or 0.5%, from their last close.

US West Texas Intermediate (WTI) crude futures CLc1 were at $66.44 a barrel, 38 cents, or 0.6%, below their last settlement.

“Global oil benchmarks have been hit hard since the start of Q4 2018 as market confidence fell (because of) weaker economic projections beyond 2018 and a massive sell-off in global equities,” said Benjamin Lu, commodities analyst at Singapore-based brokerage Phillip Futures.

Markets have been hit hard this month by a range of worries, including the Sino-US 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 which both have come off significantly in October, pointing to a slowdown in global trade. In oil, WTI has fallen nearly 10% so far this month, while Brent is down nearly 9%.

Still, oil markets remain nervous ahead of US sanctions against Iran’s crude exports, which kick in from Nov. 4.

Bowing to pressure from Washington, China’s oil-majors Sinopec and China National Petroleum Corp (CNPC) have not ordered any oil from Iran for November because of concerns that violating sanctions could impact their global operations.

China is Iran’s biggest oil customer. Halting oil Iranian imports means its many refiners will have to seek alternative supplies elsewhere.

Some relief could come from the United States, where crude production and storage levels are 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.

Output C-OUT-T-EIA remained unchanged at 10.9 million barrels per day (bpd), slightly below a record 11.2 million bpd reached at the start of October.