Oil rout deepens as U.S. crude benchmark finishes below $90 a barrel for first time since February

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Oil futures tumbled Thursday as fears rose over a global economic slowdown that could dent demand, sending the US crude benchmark to its first finish below the $90-a-barrel threshold since February.

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Oil extended losses seen on Wednesday after the Energy Information Administration said US crude supplies rose 4.5 million barrels in the week ended July 29, while gasoline supplies rose 200,000 barrels — both had been expected to fall.

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“The oil market is a mixed bag as demand destruction is met with limited spare capacity. Ongoing weakness should be unlikely since the oil market remains tight, but the break of key technical $90 level could unleash some momentum selling,” said Edward Moya, senior market analyst at Oanda, in a note.

“WTI crude should have seen massive support at the $90 a barrel level, but an intensifying global economic slowdown is changing that oil market is tight trade. WTI crude should see some support at the $88.75 if this breach of the $90 level holds,” he wrote.

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Oil fell sharply in volatile trade Wednesday, giving up early gains seen in the wake of a meager increase in output by the Organization of the Petroleum Exporting Countries and its allies — a group known as OPEC+ — to tumble sharply after the Energy Information Administration said US crude supplies were up 4.5 million barrels in the week ended July 29, while gasoline supplies rose 200,000 barrels.

The price action shows that “demand concerns are now the dominant influence on the global energy market and even though supply concerns will persist with the Russia-Ukraine war, we will need to see evidence of demand stabilizing for the oil market to begin to find a near-term bottom,” wrote analysts at Sevens Report Research, in a note.

The Energy Information Administration on Thursday said natural-gas in storage rose 41 billion cubic feet, or Bcf, last week. Analysts surveyed by S&P Global Commodity Insights, on average, had looked for a net injection of 28 Bcf.

Hear from top Wall Street energy analysts at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. RBC’s Helima Croft will be there.

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Credit: www.marketwatch.com /

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