Oil prices tumble 4% on demand outlook
Crude oil prices tumble again on lower demand; gas prices to follow.
Another slump in crude oil prices pummeled the energy sector on Tuesday.
Benchmark West Texas sank 4% to $82.32 a barrel – a 28-month low – while Brent Intermediate lost 3.4% to $85.12, a fresh four-year low. The slide came after the International Energy Agency cut its outlook for oil demand growth by more than 20% while reporting that September oil production had jumped.
“It’s really a perfect storm or negativity,” says Nasdaq energy analyst Tamar Essner. “There’s a lot of data that’s really bearish – the strengthening dollar and the sense that Saudi Arabia is not going to cut production to support prices. It seems like the market is trending lower from here. It doesn’t seem like were bottoming.”
Before Tuesday’s selling spree, oil futures had already fallen more than 20% from mid-June 2014 peaks, due to surging production in North Americ and price-cutting by key exporters Iraq, Iran and Saudi Arabia.
The carnage in crude spilled over to wholesale gasoline prices, which dropped 7 cents to $2.18 a gallon. That’s likely to continue putting pressure on retail prices, now averaging $3.18 a gallon. Price tracker gasbuddy.com says pump prices could drop another 20 cents or more by early November.
While consumers may have more money in their pockets, slide energy costs mean less profits for energy producers stocks. Drillers, suppliers and other energy producers experienced a fresh round of selling Tuesday.
Among the losers:
Chesapeake Energy CHK, down 6% Monday, fell 2% to $17.49. ConocoPhillips COP fell 3% to $66.20. Midstates Petroleum MPO sank 27% to $2.35. Hercules Offshore HERO dropped 16% to $1.47 and Hess, HES down 6% Monday, lost another 2.4% to $75.91. But Goodrich Petroleum, GDP down 29% Monday, recovered 6% to $8.10.
Source: Usatoday- Oil prices tumble 4% on demand outlook
