Deja vu: Crude oil’s collapse is bringing back memories of the decade of low prices that started in 1985 when Saudi Arabia began targeting market share, Bloomberg reports. Oil has dropped by almost half since last October when crude entered a bear market as the U.S. pumped near record rates and China’s economic growth slowed. Despite the longest decline in decades, some including Royal Dutch Shell CEO Ben Van Beurden and Morgan Stanley Investment Management Inc.’s Head of Emerging Markets Ruchir Sharma think there’s more pain to come. The current downturn resembles that of 1985 and 1986, Bloomberg Intelligence analysts Peter Pulikkan and Michael Kay say in a report released today. Read the full story.
The down low: Natural gas futures fell to fresh three-year lows today as expectations of continued weak demand outweighed a smaller-than-expected inventory build, The Wall Street Journal reports. Futures for November delivery settled down 1.8 cents, or 0.7%, at $2.386 a million British thermal units on the New York Mercantile Exchange, the lowest settlement since June 13, 2012. Natural gas inventories typically rise at this time of year as producers stock up the heating fuel ahead of the winter, when consumption rises. The so-called injection season typically ends at the end of October, and consumers then draw natural gas out of storage to use for indoor heating through the end of March. This year, forecasts for warmer-than-normal weather in the coming weeks have traders concerned that stockpiles will continue to build longer than normal this year, pushing the already oversupplied market into a deeper glut.
By the numbers: U.S. home resales rebounded strongly in September and new applications for unemployment benefits hovered around 42-year lows last week, pointing at solid domestic fundamentals even as the global economy falters. As Reuters reports, today’s upbeat housing and labor market reports could keep the door open to an interest rate hike from the Federal Reserve by the end of the year. The National Association of Realtors announced existing home sales increased 4.7% to an annual rate of 5.55 million units last month, almost erasing August’s decline. In a separate report, the Labor Department says initial claims for state jobless benefits rose 3,000 to a seasonally adjusted 259,000 for the week ended Oct. 17. Read the full story.
