Oil heads for third weekly slump as market selloff accelerates
NEW YORK (Bloomberg) -- Oil tumbled toward a third weekly drop as crumbling equity markets across the globe stoked concern about a slowdown in energy demand growth.
Futures fell as much as 1.7% in New York on Friday, on pace for the longest spell of weekly declines since August. Almost every stock in the S&P 500 was in retreat as a cavalcade of negative news killed investors’ appetites for risk. A closely watched tally of U.S. rig activity indicated drillers intend to step up crude output.
“Oil is dropping because of more concern about what’s happening in the stock market,” said Phil Flynn, an analyst at Price Futures Group. “The high volatility in the stock market and fear selling in other markets is spilling over into the oil complex.”
Crude shed 8.3% of its value so far this month, wiping out all the gains of August and September. Faltering confidence in the strength of the global economy comes as swelling American oil stockpiles spark fears about a re-emergence of a price-killing glut. U.S. efforts to isolate Iran and its crude output, as well as spiraling Venezuelan production, haven’t been enough to serve as a geopolitical counterweight to the selloff.
“Equities have resumed their decline and that is dragging oil down again,” said Giovanni Staunovo, an analyst at UBS Group AG. “The market is showing how much the sentiment has shifted once again.
A month ago it was bullish, now it’s bearish again.” West Texas Intermediate for December delivery rose 31 cents to $67.64/bbl at 1:10 p.m. on the New York Mercantile Exchange after earlier dipping to $66.20.
Brent for December settlement rose 54 cents to $77.43 on the London-based ICE Futures Europe exchange. Prices were down 3% for the week. The global benchmark crude traded at a $9.79 premium to WTI for the same month.
