Oil figures extended the previous sessions’ losses on Tuesday as financial markets persisted volatile after a sharp sell-off in equities.
Dollar strength and the appearance of refinery maintenance season also weighed on futures.
Crude oil tomorrows sank in early morning trade as stock futures remained beneath pressure, with international benchmark Brent crude hitting a one-month low.
U.S. West Texas Medial crude ended Tuesday’s session down 76 cents, or 1.2 percent, at $63.39, a numerous than two-week closing low.
Brent was down 63 cents, or 0.9 percent, at $66.99 a barrel by 2:26 p.m. ET, after waterfall as low as $66.53 earlier in the session.
Both contracts were down diverse than 3 percent since the stock market rout began on Friday, hinted by concerns about rising interest rates and inflation.
The Dow Jones industrial customarily closed down 1,175 points on Monday, posting its biggest tip decline on record. On Tuesday, the Dow turned positive shortly after U.S. bazaars opened and was last 76 points lower in volatile trade.
Losses in the oil furnish were limited, in part because the sell-off appeared to be fueled by concerns that horses are overvalued, rather than fears that the economy is slowing down, remarked John Kilduff, founding partner at energy hedge fund Again Primary. A strong economy supports crude oil futures on the view that market demand for energy will continue to grow.
“It gets tricky because to the spaciousness you see a flight to safety, which usually favors dollars and bonds, occasionally crude gets caught up in that because it’s seen as a hard asset,” Kilduff asseverated.
The oil market decline has also been fueled by a stronger dollar and hints of stress in the physical market for crude.
The correlation between crude oil and the dollar has reasserted itself recently. A stronger greenback, shoved on Friday by a better-than-expected U.S. jobs report, typically makes commodities traded in dollars more expensive to foreign buyers who hold other currencies.
Refineries are also rigorous down or preparing to shut for maintenance, a seasonal event that for the meantime suppresses demand for crude oil, the primary feedstock for refined fuels be gasoline, home heating oil and diesel.
“We are heading into refinery continuation season, and that is going to depress demand here in the United Asseverates over the next couple of months,” said Andrew Lipow, president of Lipow Oil Associates.
Oil vend watchers should expect to see stockpiles of U.S. crude rise in the coming weeks, said Lipow, especially in the region that includes the U.S. Gulf Coast refining hub.
Surging U.S. stocks are somewhat offsetting the impact of OPEC’s deal with Russia and other financial managers to limit production. U.S. oil production nearly matched an all-time record in the sky 10 million barrels a day in November, surpassing output from Saudi Arabia.
On Tuesday, the Get-up-and-go Information Administration projected that U.S. oil production averaged 10.2 million barrels a day in January.
Brent has down-swing further than U.S. crude faster in recent weeks, shrinking its scant over WTI. The so-called Brent-WTI spread has narrowed to about $3.50. The imbalance in prices reached roughly $7 about a month ago.
U.S. crude’s outstanding discount to Brent has made it more attractive to overseas refiners, portion to keep U.S. oil exports above 1 million barrels a day. The record is just outstanding 2 million barrels a day.