Crude oil prices tested fresh 15-month lows in midmorning trading as losses in US equity markets extended Thursday. ICE February Brent was down $1.99 to $55.24/b and NYMEX February WTI was $1.84 lower at $46.33/b. US equity markets opened lower on Thursday following a steep Wednesday afternoon selloff sparked by a US Federal Reserve interest rate hike. The Dow Jones Industrial Average was treading water, down around 0.8% in midmorning trading, building on a more than 1.5% decline during the previous session. But equity markets stepped lower later in the session, with the DJIA falling as much as 1.3% and pushing crude to fresh lows.
“We are seeing continued pressure on oil due to economic uncertainty and fears of a demand slow down,” Price Futures Group senior market analyst Phil Flynn said. “The market is pricing in a real slowdown in the economy, it may become a self-fulfilling prophecy.” Thursday’s slide pushed Brent to a fresh 15-month low and WTI was holding just above this threshold, which it last reached on Tuesday.
A weaker US dollar failed to buoy crude prices on Thursday. The ICE ULSD futures index weakened 0.4% overnight to around 96.14 on Thursday, and was on pace to close at its lowest since November 1. A weaker dollar typically correlates with higher oil prices. “Oil traders not very optimistic even though there is reason to be so in the data,” Flynn said about Wednesday’s US Energy Information Administration report. US commercial crude inventories fell 497,000 barrels to 441.46 million barrels for the week ended December 14, according to EIA data. The report also showed implied demand for all refined products increased 848,000 b/d to 22.33 million b/d, just shy of the all-time high recorded in early November.