Crude Oil Plummets To End Below $88 On Demand Growth Concerns

(RTTNews) - U.S. crude oil plunged to end at a 17-month low on Wednesday, on demand growth concerns after an official weekly oil report from the Energy Information Administration showed crude stockpiles in the U.S. to have climbed more than expected last week.

Investors continued to mull over the gloomy global economic growth scenario projected by the International Monetary Fund yesterday. Global economic worries and a reduction in oil prices by Saudi Arabia's Aramco for its Asian and U.S. buyers also fueled crude oil's decline.

Washington-based International Monetary Fund in its World Economic Outlook slashed global growth projection for this year to 3.3 percent from 3.4 percent predicted in July. The forecast for 2015 was lowered to 3.8 percent from the 4 percent forecast earlier.

Earlier today, a weekly report from the U.S. Energy Information Administration showed U.S. crude oil inventories to have risen 5 million barrels in the week ended October 3, while analysts anticipated an increase of 1.6 million barrels. The EIA report showed U.S. crude oil inventories at 361.7 million barrels, end last week.

Gasoline stocks rose by 1.8 million barrels last week, with analysts anticipating a decrease of 1.0 million barrels. Inventories of distillate, including heating fuel, rose 0.4 million barrels last week.

A report released by the American Petroleum Institute late Tuesday evening showed U.S. crude inventories to have risen by 5.1 million barrels in the week ended October 3, compared to an expectation of a 1.4 million barrels rise.

Light Sweet Crude Oil futures for November delivery, the most actively traded contract, plunged $1.54 or 1.8 percent to close at $87.31 a barrel on the New York Mercantile Exchange Wednesday.

Crude prices for November delivery scaled a high of $88.63 a barrel intraday and a low of $86.83 - a level not seen since April 2013.

On Tuesday, crude oil plunged to end sharply lower amid demand growth concerns after the International Monetary Fund slashed its global growth forecast for the year.

The dollar index, which tracks the U.S. unit against six major currencies, traded at 85.23 on Wednesday, up from its previous close of 85.66 late Tuesday in North American trade. The dollar scaled a high of 85.92 intraday and a low of 85.21.

The euro trended higher against the dollar at $1.2741 on Wednesday, as compared to its previous close of $1.2669 late Tuesday in North American trade. The euro scaled a high of $1.2749 intraday and a low of $1.2624.

In economic news, China's services sector continued to expand in September, albeit at a slower pace with a PMI score of 53.5, a survey from HSBC Bank showed Wednesday. That's down from 54.1 in August, although above the 50 that separates expansion from contraction.

U.K. house prices increased more than expected in September, data from Halifax showed Wednesday. House prices rose 0.6 percent in September from August, when prices remained flat. Economists had forecast a 0.2 percent rise for September. Annually, prices were 9.6 percent higher in the three months to September than in the same three months last year, similar to last month and in line with expectations.

Meanwhile, a survey from Bank of France showed Wednesday the French economy is forecast to grow marginally in the third quarter, even as business confidence weakened in September. Gross domestic product of France is forecast to grow 0.2 percent in the third quarter, unchanged from the previous forecast.

Business confidence in France dropped to 96 in September from 97 in August, while industrial production remained stable in September. Business leaders expect an increase in production in October. The composite index, which covers both manufacturing and services sectors, came in at 52.3, expanding for the fifth straight month but down from the 17-month high of 52.8 in August.

The Organization for Economic Cooperation and Development said Wednesday that its composite leading index signaled mixed outlook to major economies, characterized by weakening growth in the euro area and stable growth in most other major economies. The OECD composite leading index remained unchanged at 100.4 in August. On a yearly basis, the index rose by 0.14 percent.