LONDON (Reuters) – Oil prices steadied on Thursday, recovering from an early sell-off after Asian and European stock markets plunged in the wake of Wall Street’s biggest daily decline since 2011.
Oil and gas tanks are seen at an oil warehouse at a port in Zhuhai, China October 22, 2018. REUTERS/Aly Song
Brent crude oil LCOc1 fell 82 cents, or 1.1 percent, to a low of $75.35 before recovering to trade around $76.32, up 15 cents, by 0910 GMT. The global benchmark has lost more than $10 a barrel since hitting a high of $86.74 on Oct. 3.
U.S. light crude CLc1 was unchanged at $66.82 after touching an intraday low of $65.99, down 83 cents.
“The market looks negative with lower numbers likely,” said Robin Bieber, technical analyst at London brokerage PVM Oil.
“Expect spirited rallies,” Bieber said, adding that he would consider such spikes as selling opportunities.
Financial markets have been hit hard by a range of worries, including the U.S.-China 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, both of which have declined significantly in October, pointing to a slowdown in global trade.
Many investors are concerned about rising oil inventories as supply exceeds demand in some key markets, including the United States.
U.S. crude oil production C-OUT-T-EIA has risen steadily over the past decade and hit a record high of 11.2 million barrels per day (bpd) this month.
U.S. commercial crude 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. [EIA/S]
Saudi Energy Minister Khalid Al-Falih said on Thursday that there could be a need for intervention to reduce oil stockpiles after increases in recent months.
“We (have) entered the stage of worrying about this increase,” Al-Falih told state broadcaster al-Ekhbariya.
He added that intervention might be required to return to the stability reached after “tireless efforts during the past year and a half”.
Despite rising stocks, oil markets are concerned about the impact of U.S. sanctions on Iranian crude exports, which kick in from Nov. 4.
Bowing to pressure from Washington, Chinese oil majors Sinopec and China National Petroleum Corp (CNPC) have yet to buy any oil from Iran for November because of concerns that sanctions violations could hurt their operations.
China is Iran’s biggest oil customer. Halting oil Iranian imports means that China’s many refiners will have to seek alternative supplies.
(GRAPHIC: U.S. oil production and storage levels – tmsnrt.rs/2OPukzK)
Reporting by Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE; Editing by David Goodman