Oil slumps below $80, stocks wobble

Oil prices have hit their lowest levels since July


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Published: Wed 8 Nov 2023, 9:38 PM

Brent crude fell below $80 per barrel for the first time since July on Wednesday, while stocks struggled, as concerns about the economic outlook weighed on investors.

Brent crude, the main international contract, briefly dropped more than 2 percent to hit $79.80, before bouncing back above $80 per barrel.

Meanwhile, the main US contract, WTI, slumped as far as $75.44 per barrel, also hitting its lowest level since July.

"Oil prices have hit their lowest levels since July today as weaker economic expectations continue to weigh," said market analyst Craig Erlam at OANDA.

Crude had already plunged about four percent the previous day on news that China's exports fell at a faster pace than predicted in October. That stoked fresh concern over its appetite for energy.

"The focus is clearly shifting from undersupply to weak demand and central banks insisting that rates must remain high could further exacerbate that," Erlam added.

The drop in oil prices provided some support to stocks, but they still struggled.

After opening with modest gains, Wall Street's main indices slipped into the red.

"There is not a lot of conviction in this morning's trade (in US markets)," said Briefing.com analyst Patrick O'Hare ahead of the opening bell.

"The most transparent explanation for that is that there is a nagging sense the market is due for a pullback," he added.

Wall Street stocks surged last week after the US central bank hinted at no more increases in interest rates and data showed that the economy is on course to slow but not contract.

But traders have nevertheless been concerned about growth prospects, including in the United States, with a drop in market rates being something of a double-edged sword.

While the lower borrowing costs should be a boost for business, O'Hare said some investors seem to be worried the drop in market interest rates is more an indication of the degraded business outlook.

"This disconnect likely helps explain some of the churning taking place right now, as market participants struggle to reconcile if interest rates are going down entirely for the right reasons," said O'Hare.

In Europe, London ended the day marginally lower, held back by natural resource and energy stocks.

Both Frankfurt and London closed with modest gains.

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