An employee works on at the Centenario deep-water oil platform in the Gulf of Mexico off the coast of Veracruz, Mexico. Picture: REUTERS
An employee works on at the Centenario deep-water oil platform in the Gulf of Mexico off the coast of Veracruz, Mexico. Picture: REUTERS

Tokyo — Oil prices fell to two-week lows on Thursday as they extended big losses from the previous session amid a rout in global stock markets.

Crude also took a hit from an industry report showing US crude inventories rose more than expected.

Supply worries eased as Hurricane Michael looked to have spared oil assets from significant damage as it smashed into Florida, even as it caused at least one death, injuries and widespread destruction.

Brent crude futures were down $1.22 or 1.5% at $81.87 a barrel by 2.37am GMT. They earlier touched their lowest since September 28 at $81.61, after closing 2.2% lower on Wednesday.

US West Texas Intermediate (WTI) crude futures were down by $1 or 1.4% at $72.17, having also fallen to their lowest since September 28. They dropped 2.4% in the previous session.

Stocks on major world markets slid to a three-month low on Wednesday, with the benchmark S&P500 stock index falling more than 3%, its biggest one-day decline since February.

Technology shares tumbled on fear of slowing demand and concern about US-China tension. Japan’s Nikkei 225 was down nearly 4% on Thursday.

“Ugly, very very ugly,” Greg McKenna an independent market strategist based near Sydney said in a morning note, referring to declines in global markets including oil.

US crude stockpiles rose more than expected last week, while petrol inventories increased and distillate stocks drew, industry group the American Petroleum Institute said on Wednesday.

Crude inventories climbed by 9.7-million barrels in the week to October 5, to 410.7-million, compared with analyst expectations for an increase of 2.6-million barrels.

Crude stocks at the Cushing, Oklahoma, delivery hub rose by 2.2-million barrels, API said.

The US Energy Information Administration (EIA) is due to release official government inventory data Thursday at 11am EDT.

In the US Gulf of Mexico, producers have cut daily oil production by roughly 42% due to the storm, the Bureau of Safety and Environmental Enforcement said. The cuts represent 718,877 barrels a day of oil production.

While production has been cut because of the hurricane, “down time is expected to be brief and Gulf of Mexico output now accounts for a comparatively small portion of total US production”, Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

US oil output is expected to rise by 1.39 -million barrels a day to a record 10.74-million barrels a day, the EIA said in its monthly forecast on Wednesday.

Reuters

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