LONDON (Reuters) – Oil price stabilized on Thursday, recovering from an early sell off after stock markets in Asia and Europe eased off after Wall Street's biggest decline since 2011.
FILE FILE – An oil pump jack of the Canadian group Vermilion Energy will be shown on October 13, 2017 in Parentis-en-Born, France. REUTERS / Regis Duvignau
Brent crude LCOc1 fell 82 cents, or 1.1 percent, to a low of $ 75.35 a barrel before rising to around $ 76.37 at 1325 GMT. This corresponds to an increase of 20 cents. The global benchmark has lost more than $ 10 a barrel since peaking at $ 86.74 on October 3.
The light CLc1 in the US rose 20 cents to $ 67.02, after reaching an intraday low of $ 65.99.
Fiona Cincotta, City Index market analyst, said that factors outside the oil market would now influence sentiment.
"Fear and fear of the global economy are currently playing a bigger role in the price of oil than the actual foundations of supply and demand," said Cincotta.
Financial markets have been hit hard by a series of concerns, including the US and Chinese trade wars, a move away from emerging market currencies, rising borrowing and bond yields, and economic concerns in Italy.
The weakness is also evident in container and bulk freight rates, both of which declined significantly in October, indicating a slowdown in world trade.
Many investors are worried about rising oil inventories as demand in some important markets, including the US, exceeds demand. US crude oil production C-OUT-T-EIA has been rising steadily over the last decade, reaching a record high of 11.2 million barrels per day (bpd) this month.
US C-STK-T-EIA commercial crude oil stocks rose last week for the fifth week in a row, rising 6.3 million barrels to 422.79 million barrels, the Energy Information Administration said.
Saudi Arabia's OPEC governor said Thursday the oil market could face an oversupply in the fourth quarter.
"The market could move towards oversupply in the fourth quarter as evidenced by rising inventories in recent weeks," Adeeb Al-Aama told Reuters.
Saudi Energy Minister Khalid Al-Falih said on Thursday that, following the increase in oil stocks in recent months, intervention may be needed to reduce oil supplies.
Investors will also pay close attention to US sanctions on Iranian crude oil exports as they will come into effect on 4 November.
Due to pressure from Washington, Chinese oil majors Sinopec and China National Petroleum Corp. (CNPC) have not yet bought Iran oil for November because they fear that sanctions violations could affect their operations.
China was Iran's largest oil customer.
(Graphic: oil production and storage levels in the US – tmsnrt.rs/2OPukzK)
Reporting by Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE; Editing by David Goodman and Emelia Sithole-Matarise