LONDON: Oil stood $69 a barrel after falling to its lowest in over seven months on Wednesday, pressured by high US stockpiles and as concern over tighter financial regulation dampened appetite for riskier assets.
The decline in oil for a third day followed Tuesday’s report from industry group the American Petroleum Institute showing crude inventories at the storage hub at Cushing, Oklahoma, rose to a record high.
Also Germany’s move to ban naked short-selling of some securities, including the stocks of its 10 most important financial institutions, hit equities and the euro as investors moved out of riskier assets.
“It’s all financial markets-driven,” said Carsten Fritsch, commodities analyst at Commerzbank. “The news regarding short-selling was quite surprising and it led to a rapid strengthening of the US dollar and falling equity markets, and this affects commodity prices.”
US crude for June delivery fell as low as $67.90, its lowest intraday level since September 30, 2009. By 1257 GMT, the contract was down 22 cents at $69.19 a barrel. Brent crude was down 30 cents at $74.13.
Investors moved into safe havens such as the dollar and the yen on fears tighter financial regulation would derail the global economic recovery.
Analysts who use past price moves to predict future direction said US crude’s next support level is around $66 a barrel, almost $20 short of the 19-month high of $87.15 prices reached on May 3.
Oil markets look well supplied with inventories in the US on the rise and the Organization of the Petroleum Exporting Countries pumping 2 million barrels a day (bpd) more than its official output limit.