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Crude Oil Jumps More than 1% on Supply Concerns

October 9, 2018 at 18:49 by Vladimir Vyun

While yesterday positive fundamentals were unable to bolster oil prices, that changed today. Crude jumped more than 1% as US companies shut down almost 20% of Gulf of Mexico oil production due to the threat of Hurricane Michael. Falling supply from Iran due to US sanctions also helped the prices to rise. Crude oil is a risk-sensitive commodity, tending to fall during times of risk aversion, but today the positive fundamentals managed to overcome the generally negative sentiment among traders.

Despite all the positive factors, Fatih Birol, executive director of the International Energy Agency, warned that “the oil markets are entering the red zone.” He argued that expensive energy “is back at a bad time, when the global economy is losing momentum.” Indeed, performance of crude is linked to economic growth, and the International Monetary Fund just downgraded the outlook for the global growth.

Contract for delivery of WTI crude oil in November advanced 1.00% to $75.03 per barrel as of 18:29 GMT on NYMEX today. December futures for Brent crude jumped 1.44% to $85.12 per barrel on ICE.

If you have any questions and comments on commodities today, use the form below to reply.

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