Oil is set for the longest losing streak in two months as a global rout sparked by a plunge in U.S. equities bled into Asian hours, dragging down everything from commodity markets to energy stocks.
Crude futures in New York slid as much as 1.3 percent, falling for a third day. Stock indexes from Japan to Hong Kong tumbled on Tuesday after a frantic selloff in U.S. shares sent the Dow Jones Industrial Average to its biggest loss in 6 1/2 years. PetroChina Co., Cnooc Ltd. and Inpex Corp. were among energy shares that plunged, posting losses of more than 4 percent, while metals including copper and zinc also slumped.
Oil is being swept into the global selloff at a time when concerns were emerging that a rally in crude was overdone. Speculation is also rising that U.S. shale production and stockpiles will undermine efforts by OPEC and its allies’ to trim a global glut. The number of rigs searching for crude in America has jumped to the highest in almost six months and U.S. output breached 10 million barrels a day to the highest in more than 40 years in November.
“The main driver of the selloff in oil are the concerns about increasing shale oil supplies,” Ric Spooner, an analyst at CMC Markets, said by phone from Sydney. “Nervousness is also being fueled by today’s risk-off sentiment.”
West Texas Intermediate for March delivery dropped as much as 86 cents to $63.29 a barrel on the New York Mercantile Exchange and traded at $63.60 as of 3:31 p.m. in Singapore. Prices are headed for a third straight decline, their longest losing streak since Nov. 29. Total volume traded was about 113 percent above the 100-day average.
Volatility jumped, with the Cboe/Nymex Oil Volatility Index gaining 12 percent on Monday to the highest level since November.
Brent for April settlement lost 61 cents, or 0.9 percent, to $67.01 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $3.74 to April WTI.
Energy-related stocks also took a hit as equity benchmarks across Asia spiraled. PetroChina slumped as much as 7.3 percent and Cnooc slid almost 7 percent at one point in Hong Kong. Inpex lost as much as 7.2 percent in Tokyo. In the U.S., its two biggest oil companies — Exxon Mobil Corp. and Chevron Corp. — plunged more than 5 percent to be among the worst performers on the Dow Jones.
Fears that American oil may thwart a further rally in crude prices has also been weighing on investors’ minds. U.S. inventories probably grew 3 million barrels a day in the week through Feb. 2, according to a Bloomberg survey ahead of government data due Wednesday. Nationwide crude stockpiles in the previous week added 6.78 million barrels, the biggest gain in more than 11 months.
Other oil-market news:
Gasoline futures continued their slide, falling for a fourth day to $1.8301 a gallon, the lowest level in almost a month. Pessimism is prospering in the oil-options market after unbridled investor optimism lifted crude futures to their best January in more than a decade.