NEW YORK (DTN) -- New York Mercantile Exchange oil futures accelerated their weeklong selloff Friday morning amid risk aversion and growing concern over record high U.S. oil production. West Texas Intermediate and the Brent crude contract on the Intercontinental Exchange posted the longest run of declines since last November.
Long liquidation selling was further spurred by this week's selloff in domestic and global equities and inflation worry that is expected to accelerate monetary tightening by the Federal Reserve, including lifting the federal funds rate three or four times this year. Higher interest rates could limit the volume of buying in commodities amid increased borrowing costs.
The Dow Jones Industrial Average is down about 10% from its Jan. 26 peak at 26,616 points, entering correction territory in volatile trading, while the U.S. dollar trading at a two-week high on a flight to security by risk-averse investors. Several analysts have linked this week's selloff in equities to market rebalancing following an extended bull run into record territory.
The Dow and S&P 500 index opened 200 points and 20 points higher, respectively, this morning after plunging more than 1,000 points or 4.15% and 100 points or 3.75% on Thursday.
On Wednesday, the Energy Information Administration reported a 1.9 million bbl crude stock build to 420.3 million bbl during the week-ended Feb. 2, while supplies of gasoline and distillates up 3.4 million bbl and 3.9 million bbl, respectively.
The federal agency also reported that U.S. crude production rose 332,000 bpd to a 10.251 million bpd record high last week, 1.273 million bpd above the comparable week a year ago. The previous record high was achieved in November 1970 at 10.044 million bpd.
Oil services provider Baker Hughes will update drilling activity for this week in its rig count report set for release at 1:00 PM ET.
At last look, NYMEX March WTI crude futures were down 71cts at $60.44 bbl, off a $60.07 better than five-week spot low. April Brent crude oil on ICE dropped 73cts to $64.08 bbl, near a seven-week spot low of $63.70.
NYMEX March ULSD futures sank 3.52cts to $1.8861 gallon, and traded at a $1.8710 two-month spot low. March RBOB futures tumbled 3.64cts to $1.7286 gallon, near a seven-week spot low of $1.7197.
George Orwel can be reached at email@example.com
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