Brent crude slumped more than three percent to below the $70 per barrel level, while the main US contract, West Texas Intermediate (WTI), tumbled during trading and closed down more than four percent.
Oil’s main international benchmark fell below $70 per barrel on Tuesday, the first time it has done so since the end of 2021, amid mounting concerns about slowing global growth.
Meanwhile, global stock markets diverged as traders assessed the outlook for interest rates in the United States and Europe and looked ahead to the release of fresh consumer inflation data on Wednesday.
Brent crude slumped more than three percent to below the $70 per barrel level, while the main US contract, West Texas Intermediate (WTI), tumbled during trading and closed down more than four percent.
Analyst Tamas Varga at PVM Oil Associates said the OPEC oil cartel revising its demand estimates lower was one reason for the fall, but not the main one as the changes were minimal.
“Chinese economic woes — August crude oil imports fell seven percent on the year — and the growing belief that the Fed will only cut 0.25 percent next week weigh more heavily in the current sell-off,” he told AFP.
Swissquote analyst Ipek Ozkardeskaya said even mitigating factors like impending interest rate cuts and OPEC+ holding off on production increases was not enough to stem the downward trend.
“Oil bulls are not willing to swim against such a strong tide — and that also adds to the momentum,” she added.
– Mixed US Equities –
US equities finished mixed Tuesday, after Friday’s slump on the back of disappointing US jobs data, which rekindled fears the Federal Reserve had waited too long to begin cutting interest rates.
The Dow Jones Industrial Average finished down 0.2 percent, while the broad-based S&P 500 gained 0.5 percent, and tech-rich Nasdaq Composite Index rose 0.8 percent.
Traders were also keeping an eye on US politics on Tuesday, ahead of the sole scheduled debate between US presidential candidates Kamala Harris and Donald Trump.
Investors were also looking ahead to US consumer inflation data due Wednesday.
“Tomorrow’s US inflation figures could be the next key test of investor sentiment,” noted AJ Bell investment director Russ Mould.
The Federal Reserve is widely expected to cut US interest rates at next week’s meeting, but debate surrounds whether it will be by 25 or 50 basis points, with some arguing that going for the bigger option could suggest decision-makers are worried.
Tokyo – Nikkei 225: DOWN 0.2 percent at 36,159.16 (close)
Hong Kong – Hang Seng Index: UP 0.2 percent at 17,234.09 (close)
Shanghai – Composite: UP 0.3 percent at 2,744.19 (close)
Euro/dollar: DOWN at $1.1023 from $1.1041 on Monday
Pound/dollar: UP at $1.3083 from $1.3075
Dollar/yen: DOWN at 142.44 yen from 143.11 yen
Euro/pound: DOWN at 84.25 pence from 84.42 pence
AFP
