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Oil capped its worst month in more than two years as concerns mount that the global economy will slow down.
Futures in New York closed 1.3 percent lower on Wednesday, extending October’s loss to 11 percent, the biggest since July 2016. A global equity rout and an escalating U.S.-China trade war are stirring demand-growth concerns. U.S. supply data also showed a sixth straight weekly rise in domestic crude inventories.
On top of demand concerns, all eyes are on any impact from Iranian sanctions that are set to kick in on Nov. 4, with many taking a view that Saudi Arabia and OPEC will pump enough to fill any supply shortages.
“We’re right on the cusp of Iran sanctions taking full effect. They may be able to get more barrels to the market in a more clandestine fashion, but that’s a wait-and-see,” said Stewart Glickman, an energy equity analyst at CFRA Research. “On the demand side, there are macro fears and this is a reasonable factor to be worried about. You have the potential for a recession that would eat into GDP, and of course, GDP and global oil demand are pretty well-correlated.”
West Texas Intermediate crude for December delivery dipped 87 cents to settle at $65.31 a barrel on the New York Mercantile Exchange, the lowest since Aug. 15. Total volume traded was about 7 percent below the 100-day average.
Brent for December, in its last session before expiry, fell 44 cents to settle at $75.47 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $10.16 premium to WTI. The more-active January Brent contract fell 91 cents to end the session at $75.04 a barrel.
The EIA reported U.S. crude stockpiles rose 3.22 million barrels last week, while distillate and gasoline supplies declined. The data also showed refinery utilization rates ticked higher for a second straight week, signaling seasonal maintenance might be coming to a close. source: Bloomberg