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Crude Oil Sinks Despite Shutdown of Production in Gulf of Mexico

October 10, 2018 at 16:45 by Vladimir Vyun

Crude oil sank more than 2% today despite the increasing threat from Hurricane Michael, which intensified to Category 4 storm. At the same time, natural gas continued to rise to new highs. About 40% of daily oil production and more than one-third of natural gas production was shut down in the US Gulf of Mexico.

Some market analysts explained the drop of oil prices by a delayed reaction to yesterday’s downgrade of the global growth outlook by the International Monetary Fund. Performance of crude is linked to economic growth as better performing economy means higher fuel and energy consumption.

Markets did not receive an official report about US crude oil inventories today. While usually the data comes out on Wednesday, this week many US reports were delayed by one day due to the Columbus Day holiday on Monday.

Contract for delivery of WTI crude oil in November declined as much as 2.2% to $73.31 per barrel as of 16:31 GMT on NYMEX today. December contract for Brent crude dropped 1.88% to $83.40 per barrel on ICE. Meanwhile, November natural gas climbed 0.62% to $3.29 per million British thermal units on NYMEX.

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