MW: Oil futures extend decline as global stocks fall
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Oil futures extended their decline Thursday, as concerns escalated about the impact of a global economic recession on oil demand and as stock markets worldwide posted steep losses.
Crude oil for December delivery dropped $2.69 to $62.56 a barrel in electronic trading on Globex.
Earlier, the contract hit an intraday low of $62.30 a barrel.
Oil fell "as global recessionary concerns intensified after a sharp slide in global equities," wrote analysts at Sucden Research in a note.
"Oil prices are more or less tracking the movements of global equity markets at the moment, as market participants view the indices as a gauge for economic conditions and hence as indicators for future oil demand," they said.
On Wall Street, U.S. stocks fell Thursday, as the lowered sales outlook from Cisco Systems and largely grim retail sales underlined the economic pressures facing the country. The Dow Jones Industrial Average fell 111 points, or 1.2%, to 9,031.
Asian and European stock markets also posted losses. Against that backdrop, the Bank of England took drastic action Thursday in the face of a potentially severe and long-lasting economic contraction, slashing its key interest rate 1.5 percentage points to 3%. Read more.
The European Central Bank also cut rates, but by a more modest half point.
Crude-oil futures closed more than 7% lower Wednesday, giving back most of the 10% gain they made in the prior session after a government report showed no change to crude supplies and refinery activity.
Crude supplies were unchanged last week and remained at 311.9 million barrels, the Energy Information Administration (EIA) said Wednesday. Data show that crude stocks had climbed nearly 22 million barrels over the last six weeks.
They were up 1.8 million at 309.4 million barrels, according to a separate report Wednesday released by the American Petroleum Institute.
Also on the Globex Thursday, December reformulated gasoline fell 6 cents to $1.37 a gallon and December heating oil fell 6 cents to $1.99 a gallon.
December natural gas futures dropped 27 cents to $6.98 per million British thermal units.
The EIA will report its weekly data Thursday on natural-gas supplies in storage, covering the week ended Oct. 31. Analysts at IHS Global Insight expect the report to show a climb of 50 billion cubic feet.
