Oil Drops as Global Demand in Doubt

Oil futures settled lower on Tuesday, as a slumping U.S. stock market fed concerns that the outlook for energy demand will continue to soften.

Prices, however, pared some of their losses by the settlement as petroleum-products futures took a last minute turn higher following a report that Colonial Pipeline Co. has shutdown petroleum-product pipelines, according to Phil Flynn, senior market analyst at Price Futures Group.

The moves come ahead of weekly data that are expected to show a second straight weekly decline in U.S. crude supplies and a day after oil prices posted strong gains.

The October contract for West Texas Intermediate crude  settled at $45.83 a barrel on the New York Mercantile Exchange, down 85 cents, or 1.8%, on its expiration day. November crude , which is now the front-month contract, fell 60 cents, or 1.3%, to $46.36 a barrel.

October gasoline finished higher, adding 1.3 cents, or 1%, to $1.416 a gallon, while October heating oil  rose 1.8 cents, or 1.2%, to $1.532 a gallon.

Colonial Pipeline has shut down several multi-product pipelines in the Centreville, Fairfax County, Virginia area, as local authorities investigate a strong odor of gasoline, according to a report from the FairFax County Times.

Meanwhile, November Brent crude on London’s ICE Futures exchange  turned a bit higher, up 16 cents, or 0.3%, to settle at $49.08 a barrel.

“Even as oil frets about the production destruction in the U.S. energy space, worries about growth still hamper oil’s price recovery,” said Flynn.

Via MarketWatch.com

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza