OPEC officials meeting in Vienna raced to salvage an oil-production deal on Wednesday after Iran said it was likely to reject any agreement that raised output from the group.
Oil plunged after U.S. stockpiles swelled by the most since March 2017 and as investor concern increased that the U.S.-China trade war and Turkish crisis will undercut demand.
Futures in New York fell as much as 3.8 percent on Wednesday to the lowest level since June 21. American crude inventories increased by 6.81 million barrels last week, the Energy Information Administration reported, contrary to analyst estimates for a 2.5 million-barrel decline in a Bloomberg survey.
“The headline number along with the negativity in the overall market was taken as a very bearish number,” said Phil Flynn, senior market analyst for Price Futures Group Inc. “We’re reacting to the shock value of the big build.”
Both nationwide stockpiles and supplies in the key storage hub of Cushing, Oklahoma, increased last week.
West Texas Intermediate crude for September delivery fell $2.08 to $64.96 a barrel on the New York Mercantile Exchange at 11:39 a.m.
Brent for October settlement fell $1.69 to $70.77 a barrel on the London-based ICE Futures Europe exchange, and traded at a $6.39 premium to WTI for the same month.
Meanwhile, copper and other metals tumbled on concerns that the Turkish crisis will spill over into emerging markets. Copper slumped to the lowest in a year while nickel and zinc also retreated on fears that Turkey’s currency plunge will spread, unnerving investors already rattled by a trade dispute between the U.S. and China.
“We’re seeing a bit of ratcheting up of worries about demand growth and that is underpinned by the the tariff issues with China and whether we might be seeing signs of demand growth in Asia starting to come off a little,” said Gene McGillian, market research manager for Tradition Energy. He said investors are wondering whether the crisis in Turkey could be a contagion issue.
Other oil-market news:
Libya, holder of Africa’s biggest crude reserves, is said to be pumping more than 1 million barrels a day, about 40 to 50 percent above mid-July production, after its largest field restored normal operations. And, output at Arabian Gulf Oil Co., known as Agoco in Libya, may reach 300,000 barrels a day next week after restart of a production unit at Sarir field, said a person with direct knowledge of the matter. Diamondback Energy Inc. agreed to buy Energen Corp. in an $8.4 billion all-stock deal, the latest in more than $20 billion in acquisitions over the last month in the booming U.S. shale industry. Gasoline futures fell as much as 2.4 percent in New York, while diesel slumped 2.5 percent.
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