Saudi Move Forces Oil Prices Sharply Lower

Oil tumbled to a three-year low as Saudi Arabia’s price cuts exacerbated concern over a global glut in the commodity. Energy shares drove the Standard & Poor’s 500 Index lower with the dollar, while Treasuries climbed.

West Texas Intermediate crude slid 2 percent to $77.19 a barrel in the U.S., the lowest settlement price since October 2011. The S&P 500 was down 0.3 percent at 2,012.10 by 4 p.m. in New York, after earlier sliding as much as 0.8 percent, while the Dow (INDU) Jones Industrial Average ended the day up 0.1 percent. The Stoxx Europe 600 Index retreated 1 percent, after Japan’s Topix gauge jumped to a six-year high. The Bloomberg Dollar Spot Index lost 0.2 percent as the yen and euro rebounded. Yields on 30-year Treasuries fell one basis point to 3.05 percent.

Saudi Arabian Oil Co. reduced the cost of crude grades that it ships to the U.S. yesterday, deepening oil’s retreat into a bear market as increasing supplies worldwide outpace demand. the move fueled speculation OPEC producers favor preserving market share over propping up prices. The European Commission cut its growth forecasts for the euro area just days before a meeting of the region’s central bank. Americans vote today in midterm elections that could alter control of Congress.

Bloomberg

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