Oil falls more than 1% on bleaker economic outlook By Stephanie Kelly NEW YORK (Reuters) -Oil prices fell by more than 1% on Thursday as worries about the global economy and energy demand weighed on sentiment, while investors eyed new developments from the conflict in the Middle East. Brent crude futures were down $1.09, or […]
Oil falls more than 1% on bleaker economic outlook
By Stephanie Kelly
NEW YORK (Reuters) -Oil prices fell by more than 1% on Thursday as worries about the global economy and energy demand weighed on sentiment, while investors eyed new developments from the conflict in the Middle East.
Brent crude futures were down $1.09, or 1.2%, at $89.04 a barrel by 10:42 a.m. EDT (1442 GMT), having settled nearly 2% higher on Wednesday. U.S. West Texas Intermediate crude futures slid by $1.23, or 1.4%, to $84.16 a barrel.
Fears of a spillover in the conflict between Israel and Hamas, which could embroil Iran and its allies in the region, have supported oil prices in recent weeks, but nervousness is also making investors steer clear of risky assets.
The U.S. and other countries are urging Israel to delay a full invasion of Gaza, which is reeling from almost three weeks of Israeli bombing triggered by a mass killing spree in southern Israel by Iranian-backed Hamas.
“The market is on edge,” said Price Futures analyst Phil Flynn. “It’s critical to understand that we’re one headline away from a big rally in the market.”
Worries about the broader economy also weighed on prices. U.S. Treasury yields headed back toward 5% on Thursday, dragging shares around the world to multi-month lows.
The U.S. economy grew at its fastest pace in nearly two years in the third quarter, data showed on Thursday, raising expectations that the Federal Reserve will keep interest rates high for longer.
A rise in U.S. crude inventories in the latest week indicated weaker demand.
Inventories climbed by 1.4 million barrels to 421.1 million barrels, according to the Energy Information Administration, exceeding a 240,000-barrel gain expected by analysts from a Reuters poll.
The data follows a surprise downturn this month in euro zone business activity data.
“Though with no clear signs the war will spiral, attention is returning to volatile swings in the U.S. bond market and the broader fragile state of the world economy. That is unsettling investors,” MUFG analyst Ehsan Khoman said.
The European Central Bank left interest rates unchanged as expected on Thursday, snapping an unprecedented streak of ten consecutive rate hikes, and maintained its guidance which implies steady policy ahead.
(Reporting by Stephanie Kelly in New York; additional reporting by Ahmad Ghaddar in London and Jeslyn Lerh in SingaporeEditing by Sharon Singleton, Barbara Lewis and Jan Harvey)
