Feb. 6 (UPI) — Expectations of a build in oil and gasoline inventories and broad-based stock market concerns sent the price of oil into negative territory early Tuesday.
Crude oil prices followed major stock indices lower on Monday in what wound up being one of the worst selloffs on the Dow. Markets in Asia followed U.S. markets, with Japan’s Nikkei index closing down about 4.7 percent. London’s FTSE is trending lower before the close and most futures point to another down day on Wall Street.
Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said it’s unclear if the reversal is a market correction, or a sign of broader issues driven by inflationary fears.
“Of course, when you’re driven by fear and algorithms it’s hard to find stability,” he said in a daily commentary. “Oil is being driven down by fear and not reality as demand so far is exceptional.”
The price for Brent crude oil was down 1.24 percent as of 9:20 a.m. EST to $66.78 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 1.2 percent to $63.38 per barrel.
The price for oil will likely be determined late in the trading morning when the U.S. Energy Information Administration releases an annual market report. EIA reported total U.S. crude oil production passed 10 million barrels per day and an early read of the report Tuesday said to expect rising production and relatively flat consumption.
Meanwhile, commodity pricing group S&P Global Platts said it expects data to show crude oil stocks in the United States increased 2.8 million barrels and gasoline rose 200,000 barrels.
On inflationary pressures, the Organization for Economic Cooperation and Development reported net inflation for the world’s industrialized economy slowed 0.1 percent from November to 2.3 percent.
“Excluding food and energy, inflation increased slightly to 1.9 percent, compared with 1.8 percent in November,” the OECD stated.
Elsewhere, British energy company BP said it turned in one of its strongest performances to date in the fourth quarter. The company’s full-year profit of $6.2 billion was more than double the previous year and full-year production was the highest since 2010.
Speaking ahead of fourth quarter earnings, meanwhile, Total Chairman CEO Patrick Pouyanné told French newspaper Le Monde there were no guarantees that the price of oil will stay at its relatively high level.
“There are still many unknowns on the oil markets,” he said.