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Abu Dhabi, UAEThursday 15 November 2018

Oil prices sink after US equity rout wipes out 2018 gains

US stocks posted their biggest daily decline since 2011

In oil, WTI has fallen nearly 10 per cent so far this month, while Brent is down nearly 9 per cent. AP
In oil, WTI has fallen nearly 10 per cent so far this month, while Brent is down nearly 9 per cent. AP

Oil prices were dragged lower on Thursday by a plunge in global stock markets, with US stocks posting the biggest daily decline since 2011 to wipe out the year's gains.

Front-month Brent crude oil futures were at $75.76 a barrel at 0621 GMT, 41 cents, or 0.5 per cent, below their last close.

US West Texas Intermediate crude futures were at $66.45 a barrel, 37 cents, or 0.6 per cent, below their last settlement.

"Global oil benchmarks have been hit hard since the start of Q4 2018 as market confidence fell (because of) weaker economic projections beyond 2018 and a massive sell-off in global equities," said Benjamin Lu, commodities analyst at Singapore-based brokerage Phillip Futures.

Markets have been hit hard this month by a range of worries, including the Sino-US trade war, a rout in emerging market currencies, rising borrowing costs and bond yields, as well as economic concerns in Italy.

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In oil, WTI has fallen nearly 10 per cent so far this month, while Brent is down nearly 9 per cent.

Still, oil markets remain nervous ahead of US sanctions against Iran's crude exports, which kick in from Nov. 4.

Bowing to pressure from Washington, China's oil-majors Sinopec and China National Petroleum Corp (CNPC) have not ordered any oil from Iran for November because of concerns that violating sanctions could impact their global operations.

China is Iran's biggest oil customer. Halting oil Iranian imports means its many refiners will have to seek alternative supplies elsewhere.

Some relief could come from the United States, where crude production and storage levels are high.

US commercial crude oil stockpiles rose for a fifth consecutive week last week, increasing by 6.3 million barrels to 422.79 million barrels, the Energy Information Administration said on Wednesday.

Output remained unchanged at 10.9 million barrels per day (bpd), slightly below a record 11.2 million bpd reached at the start of October.