Oil futures dropped almost 2 percent after a government report showed U.S. inventories grew by the most in a year as refineries reduced crude processing.
The impact on Australian listed companies is that the lower oil price will help airlines such as Qantas (ASX: QAN) due to lower fuel bills, but producers such as Woodside Petroleum (ASX: WPL) and Santos (ASX: STO) will be under pressure.
November crude slumped 1.8 percent to end at $101.61 a barrel on the New York Mercantile Exchange. That was the lowest settlement for a most-active contract since July 3, according to FactSet.
The Energy Information Administration said supplies rose 6.81 million barrels to 370.5 million barrels last week, more than four times the median estimate of analysts.
The refinery operating rate decreased to 86 percent, the lowest level since April 26 from 89 percent the previous week. Units are usually idled for maintenance after the peak summer gasoline-demand season, which ended with Labor Day on Sept. 2. Refiner net input fell to 14.9 million barrels a day.
Oil also fell as talks to end the government shutdown and lift the debt ceiling remained deadlocked.
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