By Nick Godt, MarketWatch
MUMBAI (MarketWatch) -- Crude-oil futures fell on Wednesday, with concerns about the European sovereign-debt crisis reaching French banks, leading to further concerns about global economic growth and demand for oil.
Crude oil for October CL1V -1.31% delivery was down 0.8% at $89.71 a barrel, above an earlier low of $88.75 in electronic trade.
Asian markets were under pressure after French banks pared opening declines in the wake of downgrades by Moody’s Investors Service of Credit Agricole SA FR:ACA +0.27% and Societe Generale SA FR:GLE -6.20% .
Concerns that the U.S. is already headed for a double-dip recession, along with Europe, led the International Energy Agency on Tuesday to cut expectations for oil demand this year and next.
“The latest tranche of demand-growth projections for this year and 2012 fits well with the increasingly gloomy outlook on the state of the global economy,” analysts at JBC Energy said in a note.
Also late Tuesday, the American Petroleum Institute reported U.S. crude-oil inventories fell 5.05 million barrels for the week ended Sept. 9. Still ahead, investors will turn to the more closely watched data from the Energy Department’s Energy Information Administration due later on Wednesday at 10:30 a.m. Eastern.
Analysts polled by Platts expected crude-oil supplies to decline 2.9 million barrels, gasoline inventories to go down 400,000 barrels, and distillates to go up 1 million barrels.
Concerns over oil from Libya returning to markets only slowly are also weighing on crude-oil prices.
“Overall, we see the supply/demand balance over the next 18 months as relatively weak,” Tim Evans, energy analyst at Citibank, said in a note.
“Investors might buy it anyway, but they are betting on either the idea that later arrivals to the market will be willing to pay even more or the chance that further geopolitical events like the uprising in Libya will drive a further price spike,” Evans said.
