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US oil plunges 4.9 pct, ends at $46.60, on economic jitters

November 30,-0001 00:00

Traders said oil prices were also pressured by data from market intelligence firm Genscape showing a build of 230,025 barrels at the Cushing, Oklahoma storage hub for U.S. crude futures, during the week to July 1. "There are risk-off trades across the ...



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Reuters

Oil prices tumbled on Tuesday as investors worried Britain's exit from the European Union would slow the global economy.

Persistent signs of abundant supply despite another militant attack on Nigeria's oil industry also weighed on markets.

Brexit worries hit Britain's property market and drove the pound to a 31-year low. A flurry of data from China in the coming weeks is expected to show weakness in trade and investment.

Traders said oil prices were also pressured by data from market intelligence firm Genscape showing a build of 230,025 barrels at the Cushing, Oklahoma storage hub for U.S. crude futures, during the week to July 1.

"There are risk-off trades across the board," said David Thompson, executive vice-president at Washington-based commodities broker Powerhouse. "Stocks, commodities, sterling are all off while U.S. bond and T-bills are soaring."

Getty Images
An oil pump jack in the oil town of Gonzales, Texas.

Brent crude was down $2.10, or 4.2 percent, at $48 a barrel. The global benchmark is still up more than 70 percent from a 12-year low close near $28 reached in January.

U.S. crude settled 4.88 percent lower, or $2.39, at $46.60 a barrel.

Natural gas prices fell about 7 percent to just below $2.78 per million British thermal units, on pace for their worst day since October, 2015.

"Asia has been relatively weak and China is not providing much support," said Olivier Jakob, oil analyst at Petromatrix, who also said weak refined products were pressuring crude.

"Without the support of the products and with a structure in crude oil that is weakening, it is difficult to think that crude can break away to the upside."

British bank Barclays said concern over the global economy was weighing.

"The deterioration in the global economic outlook, financial market uncertainty and ripple effects on key areas of oil demand growth are likely to exacerbate already-lackluster industrial demand growth trends," the bank said in a report.

Oil has gained support this year from the perception that a supply glut that has halved oil prices in the last two years may be easing, and from unplanned outages from Canada to Nigeria. But signs of ample supply of crude and products persist.

A partial recovery in Nigeria contributed to a rise in OPEC crude production last month, a Reuters survey found last week. Several tankers carrying gasoline-making components have dropped anchor off New York harbor, unable to discharge as onshore tanks are full.

Another attack in Nigeria had a limited impact on prices.

A militant group that has been attacking the country's oil installations said on Tuesday it blew up a well and two pipelines, having claimed responsibility on Sunday for five other attacks.

In Libya, where oil output has slowed to a trickle due to conflict, the National Oil Corporation has agreed to merge with its domestic rival, raising hopes the OPEC country could start to pump more.

"Further downward price pressure is expected as signs of an oversupplied global market refuse to go away," said oil broker PVM, adding that "macroeconomic risk" was scaring buyers away.

A Reuters review of disclosures by the largest 30 U.S. shale firms showed 17 of them increased their hedge books in the first quarter, the most at least since early 2015.

Several, including EOG Resources and Devon Energy, two of the biggest shale companies, secured significant protection of future earnings for the first time in at least six months.

"You have to remember that sentiment in this market is still so fragile," said Michael Tran, director of commodity strategy at RBC Capital Markets in New York. "Producers ended up locking in something in case we did a double dip."

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