Oil futures tumbled Thursday as fears rose over a global economic slowdown that could dent demand, sending the U.S. crude benchmark to its first finish below the $90-a-barrel threshold since February.
Price action
-
West Texas Intermediate crude for September delivery
CL.1,
-2.61% CL00,
-2.61% CLU22,
-2.61%
slumped $2.12, or 2.3%, to close at $88.54 a barrel on the New York Mercantile Exchange, the lowest settlement since Feb. 2 and the first close below $90 since Feb. 10. -
October Brent crude
BRN00,
-0.14% BRNV22,
-0.14%
settled with a loss of $2.66, or 2.8%, at $94.12 a barrel on ICE Futures Europe, the global benchmark’s lowest close since Feb. 18. -
Back on Nymex, September gasoline
RBU22,
-0.76%
fell 4.1% to $2.7935 a gallon, its lowest finish since Feb. 25. September heating oil
HOU22,
+0.75%
shed 2.3% to $3.3372 a gallon. -
September natural gas
NGU22,
-1.06%
dropped 1.7%, ending at $8.122 per million British thermal units.
Market drivers
Oil extended losses seen on Wednesday after the Energy Information Administration said U.S. crude supplies rose 4.5 million barrels in the week ended July 29, while gasoline supplies rose 200,000 barrels — both had been expected to fall.
“The oil market is a mixed bag as demand destruction is met with limited spare capacity. Ongoing weakness should be unlikely since the oil market remains tight, but the break of key technical $90 level could unleash some momentum selling,” said Edward Moya, senior market analyst at Oanda, in a note.
“WTI crude should have seen massive support at the $90 a barrel level, but an intensifying global economic slowdown is changing that oil market is tight trade. WTI crude should see some support at the $88.75 if this breach of the $90 level holds,” he wrote.
Oil fell sharply in volatile trade Wednesday, giving up early gains seen in the wake of a meager increase in output by the Organization of the Petroleum Exporting Countries and its allies — a group known as OPEC+ — to tumble sharply after the Energy Information Administration said U.S. crude supplies were up 4.5 million barrels in the week ended July 29, while gasoline supplies rose 200,000 barrels.
The price action shows that “demand concerns are now the dominant influence on the global energy market and even though supply worries will persist with the Russia-Ukraine war, we will need to see evidence of demand stabilizing for the oil market to begin to find a near-term bottom,” wrote analysts at Sevens Report Research, in a note.
The Energy Information Administration on Thursday said natural-gas in storage rose 41 billion cubic feet, or Bcf, last week. Analysts surveyed by S&P Global Commodity Insights, on average, had looked for a net injection of 28 Bcf.
Hear from top Wall Street energy analysts at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. RBC’s Helima Croft will be there.
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