US crude tumbles 2.4%, settling at $73.17, as oil falls with Wall Street

Key Points
  • Oil prices drop more than $1 a barrel on Wednesday as U.S. stock markets fall.
  • The International Monetary Fund downgrades its global economic growth forecasts for 2018 and 2019 on Tuesday.
  • Iran's crude exports fall further in the first week of October as buyers seek alternatives ahead of U.S. sanctions.
Iran sanctions will become big hit to oil markets, says RBC's Helima Croft

Oil prices dropped more than $1 a barrel on Wednesday as U.S. equity markets broadly fell, but losses were limited as U.S. sanctions restricted Iranian exports.

U.S. West Texas Intermediate (WTI) crude was down by $1.79, or 2.4 percent, at $73.17 a barrel, after rising nearly 1 percent in the previous session.

Brent crude futures were down $1.90, or 2.2 percent, at $83.10 a barrel by 2:29 p.m. ET, after a 1.3 percent gain on Tuesday.

U.S. stocks markets fell on Wednesday, weighing on oil prices. Crude futures at times track with equity markets.

"As long as we continue to see broad-based weakness in the equity sector, that's going to start spilling over into other areas as well. One in particular will be energy because it's all about economic expectations," said Brian LaRose, a technical analyst at United-ICAP.

White House advisor Kevin Hassett: Higher oil prices could bring risk to outlook

Risks to the global financial system have risen over the past six months and could increase sharply if pressures in emerging markets escalate or global trade relations deteriorate further, the International Monetary Fund (IMF) said on Wednesday.

On Tuesday, the IMF cut its global economic growth forecasts for 2018 and 2019, raising concerns that demand for oil may also slump.

But concerns over global crude supply are keeping the oil market on edge and supporting prices.

Iran's crude exports fell further in the first week of October as buyers sought alternatives ahead of U.S. sanctions that take effect on Nov. 4, according to tanker data and an industry source.

Saudi Arabia, the world's biggest oil exporter, will supply Indian buyers with an additional 4 million barrels of crude oil in November, several sources familiar with the matter said on Wednesday. India is Iran's top oil client after China.

Several of the world's biggest trading houses expect U.S. sanctions on Iran to keep oil prices high, with crude staying above $65 and possibly breaking above $100 in the medium term.

Kilduff: How Hurricane Michael will impact US oil production

Jeremy Weir, chief executive of Trafigura, told an oil conference in London on Wednesday he would not be surprised to see oil trade over $100 next year.

In the U.S. Gulf of Mexico, nearly 40 percent of daily crude oil production was cut on Tuesday because of offshore platform evacuations and shut-ins ahead of Hurricane Michael.

Michael has strengthened into a "potentially catastrophic" Category 4 hurricane, according to an advisory from the U.S. National Hurricane Center.

Oil producers evacuated personnel from 75 platforms as the storm made its way through the central Gulf on the way to landfall on Wednesday in Florida.

Companies had turned off daily production of about 670,800 barrels of oil by midday on Tuesday, according to offshore regulator the Bureau of Safety and Environmental Enforcement.