Oil Futures Settle Sharply Lower For 2nd Straight Day

Crude oil prices fell sharply on Wednesday, sliding for a second straight session, amid rising concerns about the outlook for energy demand. Data showing a sharp jump in crude oil inventories in the U.S. also weighed on oil prices.

Oil prices were also hurt by a firm dollar. The dollar rose against several major currencies today amid uncertainty about the outlook for Federal Reserve’s interest-rate path. The greenback’s subsequent retreat from the day’s highs helped limit oil’s downside.

A report from the American Petroleum Institute late Tuesday showed crude oil stockpiles increased by nearly 12 million barrels in the week ended November 3rd.

Oil inventory data from Energy Information Administration (EIA) will be out only next week, the Agency announced on Tuesday. EIA said the data will be delayed to enable completion of a planned systems upgrade.

The EIA said crude production in the U.S. will rise this year by slightly less than previously expected but petroleum consumption will fall by 300,000 barrels per day. The agency had earlier forecast an increase of 100,000 barrels per day.

West Texas Intermediate Crude oil futures for December ended down $2.04 or about 2.6% at $75.33 a barrel, the lowest settlement since mid-July.

Brent crude futures settled at $79.54 a barrel, down $2.07 or about 2.54%.

“Oil prices have hit their lowest levels since July today as weaker economic expectations continue to weigh. Trade data from China on Tuesday further soured the mood and contributed to yesterday’s sharp falls. The focus is clearly shifting from undersupply to weak demand and central banks insisting that rates must remain high could further exacerbate that,” says Craig Erlam, Senior Market Analyst at OANDA, UK & EMEA.

Fed Governor Christopher Waller said in a speech on Tuesday that third quarter U.S. GDP growth was a “blowout” performance that warrants a very close eye when thinking about policy going forward.

Fellow Governor Michelle Bowman said that the economy is gaining speed and requires a higher Fed policy rate.

Both Federal Reserve Bank of Minneapolis President Neel Kashkari and Chicago Fed President Austan Goolsbee also refused to rule out further rate hikes, citing sticky inflation and the resilience in the U.S. economy.

The dollar pared gains as Federal Reserve’s Chair Jerome Powell’s much awaited speech did not provide any clues about the central bank’s interest-rate path.

Powell refrained from specifically addressing monetary policy and focused his remarks on praise for the work done by the Fed’s Division of Research and Statistics.

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