Oil futures: WTI tumbles by 6pc on global outlook

WTI crude futures tumbled by as much as 6pc today as heightened fears of a recession compelled investors to flee to safe haven investments.

November Nymex WTI fell by $4.75/bl to $78.74/bl, its lowest close since 10 January, while November Ice Brent fell by $4.30/bl to $86.15/bl. The November Brent-November WTI spread widened by 45¢/bl to $7.41/bl.

The Argus Crude Market Ticker (ACMT) showed the prompt WTI Houston bid-offer spread at $2.05-$2.20/bl over the Cushing benchmark following Nymex settlement, up from yesterday's $2.04/bl weighted-average premium.

Investors worldwide took shelter in safe haven US dollars or US Treasuries on mounting fears of recession, resulting in a broad selloff in commodities, equities, and foreign currencies.

The US DXY dollar index, which tracks the dollar versus a basket of trading partner currencies, was at its highest in more than 20 years, as investors seek the relative safety of the dollar amid the global jitters. That is making dollar-denominated commodities such as oil pricier for holders of foreign currency.

Until today, the light sweet crude benchmark at Cushing, Oklahoma, had not settled below the $80/bl mark since 10 January. WTI has fallen by $6.36/bl this week.

The jitters intensified after a slew of central banks, led by the US Federal Reserve, this week hiked interest rates and warned that inflation was likely to remain stubbornly high unless they took firm steps. Many, like the Fed, lowered their growth outlooks. The Fed expects the US economy to grow just 0.2pc in the fourth quarter from a year earlier, down from a forecast of 1.7pc in June.

The S&P Global Flash Eurozone composite purchasing managers output index fell to a 20-month low for September, a third month below the neutral level that signals contraction, while manufacturing and service activity measures also signaled contraction among the European economies most exposed to energy shortages and rising fuel prices heading into the winter.

Crude producers are also contending with a number of refinery outages, including fires and strikes in France, a fire at BP and Cenovus' 160,000 b/d refinery in Toledo, Ohio, and TotalEnergies recently embarking on turnaround activity at its 240,000 b/d refinery in Port Arthur, Texas.

The gloomy macroeconomic outlooks have overshadowed the prospect of further escalation of the war in Ukraine, which upset global crude flows and has contributed to rising prices this year.

Nymex RBOB today fell by 13.27¢/USG to $2.3830/USG and Nymex ultra-low sulphur diesel fell by 17.44¢/USG to $3.2371/USG.

By Brett Holmes