Oil prices tumbled more than 7 percent on Tuesday, with U.S. crude plunging to its lowest in over a year, caught in Wall Street`s broader selloff fed by growing concerns about slowing global growth.
U.S. West Texas Intermediate (WTI) crude futures
So far in the session, more than 836,000 front-month WTI contracts had changed hands, exceeding the daily average over the last 10 months.
Brent crude futures
Tuesday`s drop extended a slide that has been largely unimpeded since early October. WTI prices are more 30 percent lower from near four-year peaks hit in early October, weighed down by surging supply and the selloff in risk assets worldwide.
Brent has lost about 28 percent in the same period.
"For the time being it`s more about risk," said Jim Ritterbusch, president of Ritterbusch and Associates.
"When the stock market comes off 8 or 9 percent, it tends to conjure up images of a weak global economy and that feeds into expectations of weaker than expected oil demand."
The S&P 500 hit a three-week low on Tuesday as weak results and forecasts from big retailers fanned worries about holiday season sales, while tech stocks continued to slide on concerns about iPhone sales.
Global stock markets have suffered a shakeout in the past two months, pressured by worries of a peak in corporate earnings growth, rising borrowing costs, slowing global economic momentum and international trade tensions.
Amid the uncertainty, financial traders have become wary of oil markets, seeing further downside risk to prices from the growth in U.S. shale production as well as the deteriorating economic outlook.
Prices ticked lower after President Donald Trump said the United States intends to remain a "steadfast partner" of Saudi Arabia even though "it could very well be" that Saudi Crown Prince Mohammed bin Salman had knowledge of the killing of journalist Jamal Khashoggi.
Oil markets have been concerned about potential supply disruptions amid heightened tensions between the United States and Saudi Arabia over the killing of Khashoggi.
However, the United States was considering adding Venezuela, one of its biggest crude suppliers, to its list of state sponsors of terrorism but no final decision has been made, a person familiar with the deliberations said late on Monday.
Expectations for a ninth straight week of U.S. crude inventory increases also weighed on prices. Analysts polled ahead of weekly data forecast crude stocks rose about 2.9 million barrels last week.
Industry group the American Petroleum Institute is scheduled to release its data at 4:30 p.m. EST (2130 GMT), followed by government data on Wednesday morning.
U.S. crude production
The Organisation of the Petroleum Exporting Countries is pushing for a supply cut of 1 million to 1.4 million bpd when it meets on Dec. 6.
The OPEC envoy for the United Arab Emirates said it was very likely the group would reduce its output but the exact level had yet to be decided.
The International Energy Agency (IEA), however, warned OPEC and other producers of the "negative implications" of supply cuts, with many analysts fearing a spike in crude prices could erode consumption.
"We are entering an unprecedented period of uncertainty in oil markets," IEA Executive Director Fatih Birol said on Monday.GRAPHIC: U.S. oil drilling, production & storage (https://tmsnrt.rs/2PBfE7z)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)