By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) Another sharp drop in oil futures prices Wednesday raised questions about how well oil markets are functioning and how much fundamental reasons are playing a role.
Oil markets, already jittery from a steep, so far unexplained drop in a frenzied half hour on Monday, were shaken by another fall on Wednesday, albeit less pronounced and not as swift as Mondays.
Wednesdays drop has been blamed on comments from Saudi officials, and on technical trends that created resistance above $100.
Some analysts also pointed to seasonal patterns, and demand worries.
Oil on Wednesday ended 3.5% lower at $91.98 a barrel on the New York Mercantile Exchange. That was oils lowest settlement in more than six weeks, and one that puts week-to-date losses at more than 5%. Read more on oil futures.
Heres a rundown of what oil traders, analysts and energy officials are saying about oils moves this week:
Fat finger? Nope
The exchange didnt report any technical glitches on Wednesday, and on Monday had also dismissed concerns about so-called fat finger trade.
U.S. Commodity Futures Trading Commission officials have not yet returned requests for comment about the Wednesday decline, but at least an informal probe into Mondays drop seemed to be underway.
CFTC member Bart Chilton recently said the commission is seeking more information. Chilton told The Wall Street Journal superfast price moves, like we saw in oil (on Monday), put us on high alert, he said. Read more on CFTC's Chilton response.
Weak demand, big supplies
Wednesdays losses were exacerbated by a weekly government report showing a larger-than-expected increase in supplies, and weak underlying fundamentals. Demand for oil has been in decline for some time.
The Energy Information Administration on Wednesday reported an increase of 8.5 million barrels in crude supplies for the week ended Sept. 14, well above expectations for a 2.5 million increase and the American Petroleum Institutes 2.4 million estimate late Tuesday. Read more on EIAs report and APIs report.
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Oil sold off further after the EIAs 10:30 a.m. release. But it had already started to tank after Nymex floor trading opened at 9 a.m., making legs down at around 9:15 a.m. ET and 9:50 ET. By the time the EIA supply data came out, it had fallen about 2% from 9 a.m. ET to 10:30 a.m. ET.
A spokesperson for the EIA said there was no indication the report had been leaked ahead of its 10:30 a.m. ET release.
