By a bigger-than-expected shape up in US crude inventories investor sentiment were made more bearish, oil prices slumped to more than two-week lows as global stock markets fell. After hitting a low of $US79.80, Brent crude futures had a 3.41 per cent loss fell $US2.83 to settle at $US80.26 a barrel, which is its weakest since September 24, 2018. After hitting a four-year high of $US86.74 on October 3, 2018 the global benchmark has retreated. To settle at $US70.97 a barrel, a 3.01 per cent loss, US West Texas Intermediate (WTI) crude futures fell $US2.2, since September 21, 2018 WTI hit its lowest.
An increase more than double analysts' expectations of a 2.6 million-barrels, the Energy Information Administration said, US crude inventories rose 6 million barrels last week. President of Lipow Oil Associates, Andrew Lipow said, “The important increase in crude oil inventories reflects refineries going down for maintenance”. The EIA data showed, as utilization rates dropped 1.6 percentage points refinery crude runs fell by 352,000 barrels per day. What also weighed on crude futures, was the falling US equity markets and a global risk-off environment.
With regard to oil demand expectations the oil market could begin to discount a worst-case scenario, as equities slide amidst rate increases, compared than the more transparent supply side the demand side of the oil equation is always more difficult to distinguish, president of Ritterbusch and Associates, Jim Ritterbusch said in a note. For a third straight month for oil next year, forecast of global demand growth has been cut by the organization of the Petroleum Exporting Countries, which is facing the broader economy from volatile emerging markets and trade disputes. On Thursday October 12, 2018 the group's secretary-general said, OPEC is cautious of creating a surplus next year and sees the oil market as well supplied.
According to the Bureau of Safety and Environmental Enforcement (BSEE), due to Hurricane Michael producers had cut output by 40 per cent on Thursday in the US Gulf of Mexico. As the third most powerful hurricane in the history to strike the US mainland, on Wednesday Michael crashed on shore Florida, and has weakened after that to a tropical storm.
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