# Oil prices down over 2% on U.S. crude supply climb, fiscal stimulus uncertainty

For now “outside factors” are likely to drive the next movement in the energy markets, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch.

“When the president announced he is instructing his team to walk away from any stimulus and aid to certain sectors, the markets went into an immediate risk off posture,” he said. However, the president walked back the comments slightly, “asking for a deal for the airlines and direct payments to the public.” That prompted some risk-on sentiment, with U.S. benchmark stock indexes higher Wednesday.

At the same time, there’s a hurricane that will impact the Gulf of Mexico and that will need to be monitored “for exact strength and track as we go into the end of the week,” said Zahir.

West Texas Intermediate crude for November delivery
CLX20,
-2.65%

CL.1,
-2.65%
on the New York Mercantile Exchange fell $1.36, or 3.3%, to $39.31 a barrel. December Brent crude
BRNZ20,
-2.29%

BRN00,
-2.29%
dropped $1.25, or 2.9%, to $41.40 a barrel on ICE Futures Europe.

Oil prices fell late Tuesday in electronic trading following Trump’s decision to pull the plug on talks between his administration and congressional Democrats on another package of pandemic relief spending until after the election. The decision prompted a sharp selloff in U.S. stocks in afternoon trade.

A few hours later, Trump changed course, calling on Congress to send him individual relief measures, including $1,200 stimulus checks for consumers and aid for airlines and small businesses.

The partial turnabout was credited with lifting U.S. benchmark stock indexes Wednesday, but the price reaction in crude oil signals “the market isn’t buying it and we need to accept that immediate consumer relief in the U.S. will be hard to come by, at least until the election is over,” wrote analysts at JBC Energy, a Vienna-based consulting firm, in a note.

Need to Know: Why the U.S. economy could hit ‘stall speed’ as stimulus talks collapse

Meanwhile, the Energy Information Administration reported Wednesday that U.S. crude inventories rose by 500,000 barrels for the week ended Oct. 2.

That followed three consecutive weeks of declines and compared with an average fall of 2 million barrels expected by analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday had reported a rise of 951,000 barrels.

The EIA data also showed crude stocks at the Cushing, Okla., storage hub edged up by 400,000 barrels for the week.

Gasoline supply, meanwhile, fell by 1.4 million barrels, while distillate stockpiles declined by 1 million barrels. The S&P Global Platts survey had shown expectations for supply declines of 800,000 barrels for gasoline and 2.9 million barrels for distillates.

On Nymex, November gasoline
RBX20,
-3.55%
fell by 4.3% to $1.1814 a gallon and November heating oil
HOX20,
-3.19%
lost 3.7% to $1.1451 a gallon.

Traders also continue to track Hurricane Delta, which was a Category 3 storm, a major hurricane, as of Wednesday morning, moving inland over northeastern Mexico. It’s forecast to approach the northern Gulf Coast on Friday.

The Bureau of Safety and Environmental Enforcement estimated that 29.2% of Gulf oil production and nearly 8.6% of natural-gas output was shut-in as of Tuesday afternoon in anticipation of the storm.

Natural-gas futures Wednesday moved up, with the November contract
NGX20,
+2.22%
tacking on 2.5% to $2.584 per million British thermal units, after losing 3.6% a day earlier.