Oil futures fell Thursday, under pressure as a global equity selloff continued on rising fears that surging prices will hurt economic growth.
- West Texas Intermediate crude for June delivery CL.1, -0.32% CL00, 0.03% CLM22, -0.41% fell $1.55, or 1.4%, to $108.04 a barrel on the New York Mercantile Exchange.
- July Brent crude BRN00, 0.28% BRNN22, +0.29% was down 93 cents, or 0.9%, to $108.18 a barrel on ICE Futures Europe.
- June gasoline RBM22, -1.02% was down 2.9% at $3.613 a gallon after hitting all-time highs earlier this week, while June heating oil HOM22, 0.62% fell 2.3% to $3.585 a gallon.
- June natural-gas futures NGM22, 0.90% declined 3.1% to $8.123 per million British thermal units.
Crude oil was lower Thursday for a third session after oil and other energy futures fell Wednesday despite data that showed an unexpected fall in U.S. crude inventories and a larger-than-expected drop in already tight gasoline stocks —- a move analysts said likely reflected selling in response to a rout in the equity market.
“We…attribute the price slide to external factors such as the selloff on the U.S. stock markets,” said Carsten Fritsch, analyst at Commerzbank, in a note. ”The S&P 500 saw its most pronounced daily fall in nearly two years yesterday, for instance. As a result, many market participants are likely to have also jettisoned their oil forward contracts.”
Fears of slower economic growth and lower energy demand may remain a factor on Thursday, with global equities under pressure and U.S. stock-index futures pointing to another round of losses after a Wednesday decline that saw the Dow Jones Industrial Average DJIA, -0.95% fall 1,164.52 points, or 3.6%, and the S&P 500 SPX, -0.51% drop 4%, for their biggest one-day declines since June 11, 2020.
The selloff was triggered by disappointing results from retailer Target Corp. TGT, -4.95%, which showed rising costs had cut more deeply than expected into margins, analysts said. The reaction reflected growing fears of a stagflationary environment —- a combination of persistent inflation and stagnant economic growth.
Crude had found support earlier in the week as China began to loosen its lockdown of Shanghai. China’s COVID-19 lockdowns have undercut demand from the world’s largest oil importer. The implications of the Russia-Ukraine war remain a key driver of supply-side concerns, with European Union officials continuing negotiations on a plan to phase out imports of Russian energy.
Oil, meanwhile, remains rangebound between rising trend support at $99-$100/barrel while $115-$116 is likely to continue to offer initial resistance” for WTI futures, wrote analysts at Sevens Report Research, in a note.
“With all of the additional influences discussed above that will impact oil in the near term, the largest influence on energy markets will remain the Russia/Ukraine war,” they said. “Until there is a resolution there, supply concerns will keep a fear bid in the market.”