Crude oil for October delivery fell to a new low on concern surrounding the strength of the global economy. The latest report from the Commerce Department indicates U.S. growth in August was flat. A lack of growth in jobs, sales and price last month compounded the continued worry over European debt weakness. That flat performance indicates that while the U.S. is not presently in a recession a potential contraction could be ahead which would potentially weaken equity values and continue to deteriorate oil prices.
Commodities appear to be suffering across the board and oil is just one area struggling to overcome technical challenges. The price for oil is thought to be sustainable around $90, but even that level has been difficult to maintain in recent trading. The economic worry trumped even the Energy Information Administration announcement that domestic oil inventories fell 6.7 million barrels last week, far exceeding analyst expectations.
In spite of oil’s decline, related equities were up for the day beginning with BP PLC (BP) which gained after the release of a report indicating the corporation may not be entirely at fault for the 2010 oil spill that cost 11 workers their lives. While liabilities remain for BP, the blame is now distributed between the company and its contractors. Investors responded positively to the news boosting shares of the company.
The report, the conclusion of 17-months of investigation, did not impact all involved parties as positively. Halliburton (HAL), for instance, which completed the cement work at the Macondo site lost ground today after some blame landed on the oil giant.
For the most part though, energy equities followed BP higher. Transocean (RIG), was among the sector’s top gainers. Another top component in energy Exxon Mobil (XOM), closed up over a percent despite the Labor Department’s criticism of the company’s Baton Rouge, La. refinery allegedly exposing employees to fire hazards. Chevron (CVX) was also higher on Wednesday although the company confirmed a minor oil leak in a shallow water crude oil pipeline located on Main Pass Area of the Gulf of Mexico. The problem led the company to shut the pipeline down.
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