- Swelling American inventories compound global recession fears
- WTI futures fall almost 6%; Brent crude hits 7-month low
Oil plunged, re-entering bear-market territory, as a surprise increase in American crude stockpiles fueled worries about a growing glut amid an increasingly dismal economic view.
Futures in New York fell as much as 5.8% on Wednesday to lows not seen since January after a surprise increase in U.S. inventories. Crude was also swept up in a global meltdown of stock and commodity markets after rate cuts in New Zealand, India and Thailand escalated recession fears and spurred a flight to U.S. treasuries and other safe havens.
In the U.S., domestic crude inventories expanded by 2.39 million barrels last week, snapping a seven-week string of declines, according to data from the Energy Information Administration. Gasoline stockpiles also expanded, an alarming trend during what is usually the peak demand season.
“It just built on the weakness that we’ve seen this week in crude oil, which is a direct result of the trade tensions between the U.S. and China,” said Brian Kessens, a portfolio manager at Kansas-based Tortoise. “GDP growth isn’t what we expected globally, even as recently as a few months ago.”