Brent crude futuresdipped 20 cents, or 0.3 percent, to settle at $72.61 a barrel, while U.S. West Texas Intermediate (WTI) crude declined 43 cents to settle at $67.20 a barrel, with a 0.7 percent loss. (Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma. - Reuters filepic)
NEW YORK: Oil prices fell on Wednesday after U.S. crude inventories rose by much more than expected and exports fell, while the dollar added to gains after minutes showed Federal Reserve policy makers largely united on the need to raise borrowing costs further.
A gauge of stocks across the world dipped, tracking Wall Street's reaction to the Fed minutes, while the outlook on earnings soured after a warning on the European auto sector and a revenue miss from IBM.
WTI crude touched its lowest price in a month after U.S. stockpiles rose by 6.5 million barrels, almost triple what analysts had forecast. This happened even as U.S. crude production slipped last week, partly as offshore facilities closed temporarily for Hurricane Michael.
WTI fell 2.63 percent to $70.03 per barrel and Brent was last at $80.32, down 1.34 percent on the day.
"A tick higher in refining activity and a drop in production due to hurricane activity in the Gulf was not enough to halt a fourth consecutive climb in (inventories)- and a solid one at that," said Matt Smith, director of commodity research at ClipperData in Louisville, Kentucky.
MORE ASSERTIVE FED
Every Federal Reserve policy maker backed raising interest rates last month in a meeting where they also generally agreed borrowing costs were set to rise further, according to the minutes from the meeting.
The dollar index hit session highs after the Fed minutes were released, although the bulk of Wednesday’s leg up came before the news.
"There was a pretty well-formed expectation that it would more likely showcase a Fed that's more confident and assertive debating tighter policy," said Richard Franulovich, head of FX strategy at Westpac Banking Corp in New York.
The euro
Lower-than-expected UK inflation data weighed on sterling, which gave up the previous day's gains.
The Japanese yen weakened 0.35 percent versus the greenback at 112.65 per dollar. The dollar index <.DXY> rose 0.63 percent.
On Wall Street, IBM
Stocks extended losses when oil prices fell further, but the S&P 500 shifted in and out of losses after the Fed minutes and ended down less than a point.
"This is consistent with the Fed's rhetoric that they will continue to gradually raise interest rates. A lot has to happen for the Fed not to move again in December," said Ryan Sweet, head of monetary policy research at Moody's Analytics in West Chester, Pennsylvania.
"The stock market would have to go into a persistent, prolonged decline to change the Fed’s outlook on the economy."
The Dow Jones Industrial Average <.DJI> fell 91.74 points, or 0.36 percent, to 25,706.68, the S&P 500 <.SPX> lost 0.71 points, or 0.03 percent, to 2,809.21 and the Nasdaq Composite <.IXIC> dropped 2.79 points, or 0.04 percent, to 7,642.70.
European stocks hit a one-week high in early trade, but then were pulled lower by a 1.9 percent fall in an index of auto stocks <.SXAP>. Goldman Sachs said slow demand in China could hit earnings in the sector.
The pan-European STOXX 600 <.STOXX> lost 0.40 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.08 percent.
Emerging market stocks lost 0.10 percent. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> closed 0.26 percent higher, while Japan's Nikkei <.N225> rose 1.29 percent.
U.S. Treasury yields continued to trade in a tight range after a massive run-up last week, despite choppy trading after the Fed minutes were published.
Benchmark 10-year notes
The 30-year bond
Limited time offer:
Just RM5 per month.
