Natural gas holds to losses after modest climb in stockpiles
NEW YORK (MarketWatch) -- Oil futures tumbled 7% 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 $4.30, or 7%, to $61 a barrel in electronic trading on Globex. Earlier, the contract hit an intraday low of $60.16 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 264.59 points. See Market Snapshot.
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.
Taking a broad measure of the commodities sector, the Reuters/Jefferies CRB Index fell 2%. Gold futures fell more than 1%. See Metals Stocks.
"It seems to me that commodities are having a general sell-off and the dollar is stronger today," said Zachary Oxman, a senior trader at Wisdom Financial.
"Without hedge funds to push it around, crude has had a hard time putting in rallies and with the new administration looming large, oil seems to be finding comfort in the low 60's," Oxman said.
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.
Natural gas supplies
Natural-gas inventories rose by 12 billion cubic feet for the week ended Oct. 31, the U.S. Energy Department said Thursday. Analysts at IHS Global Insight expected the report to show a climb of 50 billion cubic feet.
Working gas in storage was 3,405 billion cubic feet as of Oct. 31, the government said.
After the data, December natural-gas futures fell 30 cents, or 4.2%, to $6.94 per million British thermal units in electronic trading on Globex.
Also on the Globex, December reformulated gasoline fell 9 cents, or 6%, to $1.34 a gallon and December heating oil fell 10 cents, or 5%, to $1.95 a gallon.
