Wall Street closes lower with oil supply worries

By Ovunc Kutlu

NEW YORK (AA) – Wall Street closed lower Tuesday as oil prices declined on worries about a glut of oil supply persisting through next year.

"Demand growth is slowing and supply is rising," the International Energy Agency (IEA) said in its monthly Oil Market Report on Tuesday.

"As a result, supply will continue to outpace demand at least through the first half of next year. Global inventories will continue to grow," the agency warned.

After the IEA report, investors in the global oil market began a sell-off, resulting in the price of crude to decline more than 2.5 percent.

At the closing bell, American benchmark West Texas Intermediate was down 3.1 percent to $44.88 per barrel. International benchmark Brent crude traded at $47.01 a barrel -- a 2.6 percent decline.

Stocks plunged even after Goldman Sachs lowered its forecast for the likelihood of the Federal Reserve raising interest rates this year.

The investment bank said late Monday that it now sees a 25 percent chance the Fed would increase its benchmark interest rate at its September meeting. It previously said there was a 40 percent chance of a rate hike.

The Dow Jones ended the day with a 1.4 percent loss to 18,066. The S&P 500 was down almost 1.5 percent to close at 2,127 and the Nasdaq shaved 1.1 percent to 5,155 points.