Oil fell sharply on Tuesday as concerns about slowing global economic growth, Europe’s ongoing debt crisis and weak outlooks from corporations reporting earnings pressured oil and equities markets.
Chemical company, DuPont, cuts its earnings forecast and announced 1,500 job cuts in its third-quarter earnings report that missed Wall Street expectations, helping push equities, oil and other commodities lower, according to Reuters.
DuPont’s gloomy outlook came a day after heavy machinery maker Caterpillar Inc warned the economy was slowing faster than expected. Spain’s borrowing costs rose after ratings agency Moody’s downgraded five of the country’s regions.
Business morale in France’s manufacturing sector slumped in October to its lowest level in over two years as export demand from the euro zone weakened, adding to concerns about sputtering economic growth.
TransCanada Corp’s Monday restart of its Keystone pipeline carrying crude oil from Canada to the United States added pressure on oil futures.
The economic concerns and more improving crude oil supply picture continued to counter any potential lift from the Middle East turmoil and Iran’s dispute with Israel and the West over Tehran’s nuclear program. Brent December crude fell $1.72 to $107.72 a barrel by 11:44am EDT.
Tuesday’s low trade of $107.42 was the lowest for Brent since September 20 and Brent’s 100-day moving average, a technical level monitored by chart-watching traders. Brent was last below the 100-day moving average in early August.
US December crude was down $2.60 at $86.05 a barrel, having fallen to $85.69, the lowest since mid-July. “The main bearish driver is the state of the economy,” said Filip Petersson, an analyst at SEB in Stockholm. “And that’s taken all markets down quite a bit.”
Oil prices also felt pressure from expectations that US oil inventories likely rose last week as imports recovered, a preliminary Reuters poll of analysts showed.