New York — Oil futures settled sharply lower Thursday on the back of continued slides in equity markets and a larger-than-expected build in US crude supply.
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NYMEX November WTI settled $2.20 lower at $70.97/b and ICE December Brent was down $2.83 to $80.26/b at market close.
The price decline was due in part to lowered demand expectations as global equity markets moved lower for a second day.
The NASDAQ composite index closed down 1.25% Thursday afternoon after having settled more than 4% lower on Wednesday.
"We are getting dragged down here with the rest of the market," Again Capital Partner John Kilduff said. "There are some concerns with global economy and demand, and those are overshadowing concerns of supply drop from Iran and Venezuela."
An increase in US crude supply also weighed on crude prices Thursday.
Total US commercial crude inventories added 5.99 million barrels to rise to 409.95 million barrels during the week ended October 5, US Energy Information Administration data showed Thursday. EIA data was released on Thursday due to a federal holiday on Monday.
Analysts had been expecting a smaller 1.61 million-barrel build last week, according to an S&P Global Platts Analytics survey on Monday. Despite the build, US crude stocks remain 4.67% below a five-year average.
The build was due in large part to a fall in refinery utilization to 88.8% of total capacity. Meanwhile, crude exports rose to 2.58 million b/d, a 49.5% increase from the week prior. Taken together, the data suggested that inventories will come down once seasonal refinery maintenance ebbs in coming weeks.
The data release initially had limited impact on prices, as crude futures were already trading lower following declines in Asian and European equity markets. But futures moved decidedly lower later in the day as US equity markets continued to slide.
Products futures also moved sharply lower on Thursday.
NYMEX November ULSD settled 6.27 cents lower at $2.3322/gal and NYMEX November RBOB was down 8.77 cents at $1.9327/gal at market close.
In addition to tracing the general market selloff, hurricane-related demand destruction weighed on product markets Thursday.
Hurricane Michael continued to pummel the Southeastern US with high winds and heavy rain as it worked its way north after making landfall on Wednesday. The storm caused extensive damage along the Florida coast that will weigh on end-user demand in the interim, though regional demand may spike once reconstruction efforts ramp up.
Declines in RBOB futures were exacerbated by EIA data showing lower end-user demand for gasoline contributed to a larger-than-expected 951,000-barrel build to 236.17 million barrels last week. Gasoline stocks were at their highest since June and roughly 7.3 million barrels above the five-year average. Furthermore, inventories rose to an all-time high for the first week of October.
Implied demand for gasoline slipped 24,000 b/d to 9.08 million b/d last week, slightly below the five-year average of 9.09 million b/d. But demand is the lowest for early October since 2015. -- Chris van Moessner, email@example.com
-- Edited by Annie Siebert, firstname.lastname@example.org