Oil prices slid more than $1 a barrel Thursday after Wall Street's overnight decline and a report that U.S. crude stockpiles rose last week.
Oil prices slid more than $1 a barrel Thursday after Wall Street’s overnight decline and a report that U.S. crude stockpiles rose last week.
Wall Street _ despite initially advancing after the U.S. Federal Reserve cut interest rates half a percentage point _ closed lower Wednesday as investors collected profits after two sessions of gains.
“These days, there’s a pretty strong tie-in between movements of the oil market and the equities markets,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
“The equities market drops because of expectations of slower economic activity in the U.S. and also in other markets globally, and so if the economies slow down, oil demand may also slow down,” Shum said.
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Light, sweet crude for March delivery fell $1.21 to $91.12 a barrel in Asian electronic trading on the New York Mercantile Exchange by midday in Singapore.
The contract rose 69 cents to settle at $92.33 a barrel on Wednesday.
The Federal Reserve lowered the fed funds rate, or the interest banks pay one another for overnight loans, to 3 percent, the lowest level since spring 2005. It also lowered the discount rate, or the interest the Fed charges on loans to banks, by a half-point to 3.50 percent.
“The rate cut announced yesterday in the U.S. was actually expected and had already been priced into crude futures,” Shum said.
Analysts said the cut had already been priced into stock values as well. Asian markets were mixed after the Dow Jones industrial average dropped 0.3 percent overnight.
A report of growing U.S. crude stockpiles also weighed on oil prices.
In its weekly inventory snapshot, the U.S. Energy Department’s Energy Information Administration said crude and gasoline stocks rose 3.6 million barrels each during the week ended Jan. 25. Analysts had expected crude stockpiles to rise 2.3 million barrels and gasoline inventories to rise 1.9 million barrels.
Supporting prices were expectations that the Organization of Petroleum Exporting Countries would not raise its production quotas when it meets Friday in Vienna, and word that a 315,000 barrel a day Canadian oil sands field has been temporarily shut down due to freezing temperatures. Canada is the single largest supplier of crude oil to the U.S.
Heating oil futures lost 2.68 cents to $2.5225 a gallon while gasoline prices fell 3.56 cents to $2.2984 a gallon.
Natural gas futures declined 1 cent to $8.035 per 1,000 cubic feet.
Brent crude futures lost $1.19 to $91.34 a barrel on the ICE Futures exchange in London.