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

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