Crude oil is down again this morning after losing another 2.3% in overnight trade on the New York Mercantile Exchange (Nymex). That brings the fall to 4.3% so far this week and the total fall from the highs earlier this month to more than 11%.
This week’s selling started when traders took a bearish view on OPEC’s attempts to get Iran to rein in production, which appeared to fall on deaf ears. That signaled an ongoing demand deficit in 2016.
But the big move overnight was after the EIA reported a whopping build in US oil stockpiles. The market had expected that last week’s massive increase in inventory of 7.56 million barrels would be followed by another increase, just a much smaller one of 3.86 million barrels. So the print of a much bigger than expected 8.03 million barrels increase in crude oil stocks saw traders hit the sell button.
Elsewhere in the energy complex, the European benchmark, Brent Crude, fell 1.75% and the price of natural gas dropped close to 3%.
That likely sets up some pressure on the energy sector of the ASX today which will have to grapple with the continued fall in iron ore prices, and the fact that the late rally in trade yesterday was out of step with where Chinese stocks finished, and the lead from US markets.
The December SPI200 futures contract fell 26 points overnight, around 0.5%, but the risk is for further weakness