Oil prices steady after stock markets plunge

By Christopher Johnson

LONDON (Reuters) - Oil prices steadied on Thursday, recovering from an early sell-off after Asian and European stock markets plunged in the wake of Wall Street's biggest daily decline since 2011.

Brent crude oil fell 82 cents, or 1.1 percent, to a low of $75.35 before recovering to trade around $76.32, up 15 cents, by 1055 GMT. The global benchmark has lost more than $10 a barrel since hitting a high of $86.74 on Oct. 3.

U.S. light crude was unchanged at $66.82 after touching an intraday low of $65.99, down 83 cents.

"The market looks negative with lower numbers likely," said Robin Bieber, technical analyst at London brokerage PVM Oil. He added that he expected "spirited rallies", which he would see as selling opportunities.

City Index market analyst Fiona Cincotta said factors outside the oil market were now leading sentiment.

"Fear and anxiety about the global economy are currently playing a bigger role in the oil price than the actual fundamentals of supply and demand," she said.

Financial markets have been hit hard by a range of worries, including the U.S.-China trade war, a rout in emerging market currencies, rising borrowing costs and bond yields, as well as economic concerns in Italy.

Weakness is also starting to show in container and dry-bulk rates, both of which have declined significantly in October, pointing to a slowdown in global trade.

RISING INVENTORIES

Many investors are concerned about rising oil inventories as supply exceeds demand in some key markets, including the United States.

U.S. crude oil production has risen steadily over the past decade and hit a record high of 11.2 million barrels per day (bpd) this month.

U.S. commercial crude stockpiles rose for a fifth consecutive week last week, increasing by 6.3 million barrels to 422.79 million barrels, the Energy Information Administration said on Wednesday.

Saudi Energy Minister Khalid Al-Falih said on Thursday that there could be a need for intervention to reduce oil stockpiles after increases in recent months.

"We (have) entered the stage of worrying about this increase," Al-Falih told state broadcaster al-Ekhbariya.

Despite rising stocks, oil markets are concerned about the impact of U.S. sanctions on Iranian crude exports, which kick in from Nov. 4.

Bowing to pressure from Washington, Chinese oil majors Sinopec and China National Petroleum Corp (CNPC) have yet to buy any oil from Iran for November because of concerns that sanctions violations could hurt their operations.

China is Iran's biggest oil customer. Halting oil Iranian imports means that China's many refiners will have to seek alternative supplies.

(Reporting by Christopher Johnson in LONDON and Henning Gloystein in SINGAPORE; Editing by David Goodman)