London: Oil traded at the lowest level in more than a month after Saudi Arabia reiterated its plan to lift oil output and as tumbling equities weakened sentiment.
Futures in New York fell as much as 1.8%. Saudi Arabian Energy Minister Khalid Al-Falih said the world’s biggest oil exporter will meet any shortfall in supply as a result of Iranian crude sanctions. Stock markets in Europe and Asia declined alongside US futures as investors flocked to haven assets.
Oil has dropped after reaching a four-year high earlier this month as fears over demand persist. Al-Falih’s promise of adequate supply comes even as crude inventories in the US are forecast to have increased for a fifth week, the longest streak since March 2017. Concerns about the health of the world economy, leading to the equities selloff, are seeping into the oil market.
“Equities are weighing on oil prices," said UBS Group AG analyst Giovanni Staunovo. “We likely will have more equity volatility going forward with higher rates."
West Texas Intermediate for December delivery fell as much as $1.27 to $68.09 a barrel, and traded at $68.32 on the New York Mercantile Exchange at 11:38 am London time. The November contract expired on Monday after nudging up less than 0.1%. Total volume traded Tuesday was about 10% above the 100-day average.
Brent for December settlement was $1.38 lower at $78.45 a barrel on the London-based ICE Futures Europe exchange. It earlier fell below its 50-day moving average for the first time since August. The global benchmark crude traded at a premium of $10.11 to WTI.
Saudi Arabia may boost its oil output by between 1 and 2 million barrels a day in the future, Al-Falih said at a conference in Riyadh. He said earlier this week that OPEC’s largest producer would continue to separate oil and politics. The comments come as the oil market remains on edge following the killing of journalist Jamal Khashoggi in the Saudi consulate in Istanbul.
In the US, crude stockpiles probably increased 3 million barrels last week, according to a Bloomberg survey before a government report due Wednesday. Inventories have risen more than 22 million barrels over the past four weeks as domestic drillers raised output, while refineries halted some operations for seasonal maintenance.
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