Oil sets new seven-month low on trade tensions

  • Oil sets new seven-month low on trade tensions

Oil sets new seven-month low on trade tensions

US crude futures were down $2.82, or 5.3 per cent, at $50.76 a barrel at 11:39 a.m. EDT (1539 GMT), while Brent crude fell $2.58, or 4.5 per cent to $56.34 a barrel.

At 438.9 million barrels, USA crude oil inventories were about 2 per cent above the five-year average for this time of year, the EIA said.

Talk of more action to prop up oil markets from Saudi Arabia and other producers in the Organization of the Petroleum Exporting Countries (OPEC) also supported crude prices.

At 438.9 million barrels, U.S. crude oil inventories are about 2% above the five-year average for this time of year.

In the Gulf Coast region, stockpiles of both gasoline and distillate rose to the highest level on record for this time of year, the data showed.

"The most significant outcome of the ramp-up in tariff measures will be through increased economic and trade uncertainties, negatively impacting physical oil and gas demand and market sentiment", Fitch Solutions said in a note.

Brent has plunged more than 10 per cent over the past week after U.S. President Donald Trump said he would slap a 10 per cent tariff on a further 300 billion dollars in Chinese imports from September 1, sending global equity markets into a tailspin.

Elsewhere, data indicating a larger than expected drop in US crude stocks offered some support to oil prices after several weeks of large draws on inventories.

"The market continues to trade lower on concerns about demand growth and the idea that economic growth can be impacted by the trade war", said Gene McGillian, vice president of market research at Tradition Energy in Stamford Connecticut.

The bank lowered its 2019 price outlook, mostly because of demand concerns, forecasting that global oil supplies will exceed consumption in the first half of next year. Yesterday, the EIA in its monthly report announced that it lowered the forecast for 2019 global demand growth by 70,000 barrels per day to 1 million barrels per day.

"People saw those numbers and it put a negative vibe in the market", said Robert Yawger, director of energy futures at Mizuho in NY.

"We could keep following the trend lower", Graves said.

Refinery crude runs rose 786,000 bpd, EIA data showed.

But Trump on Tuesday dismissed fears the trade row with China could be drawn out. Still, U.S. stock indexes tumbled more.

But demand for safe-haven assets such as government debt underscored lingering anxiety over recession risks.

Tensions in the Middle East have heightened in the wake of attacks on tankers and USA drones, raising concerns over passing through the Straight of Hormuz, a key shipping artery of global oil trade.