Oil slid to a two-month low as escalating U.S.-China trade tensions imperiled global growth at a time when American crude inventories are swelling.
Futures declined as much as 2.6 per cent in New York on Tuesday. The U.S. is preparing another round of tariffs on Chinese imports if talks between the presidents of the world’s two largest economies falter. Meanwhile, oil stowed in American storage tanks probably expanded for a sixth week, extending the longest streak of increases since early 2017, according to a Bloomberg survey.
“Trade tensions with China have impacted demand,” said Phil Streible, senior market strategist at RJ O’Brien Associates LLC.
Crude has retreated about 10 per cent as threats to worldwide demand overwhelmed concerns about supply disruptions in Iran and Venezuela.
“Investors have become wary of the global economic outlook,” said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. “Saudi Arabia has pledged to raise output, and together with rising U.S. stocks, it has eased supply concerns in the market.”
West Texas Intermediate for December delivery fell US$1.31 to US$65.73 at 10:58 a.m. on the New York Mercantile Exchange.
Brent for December settlement, which expires Wednesday, fell US$1.30 to US$76.04 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a US$10.31 premium to WTI.
U.S. officials are preparing a new tariff list which would apply to Chinese products that aren’t already covered in lieu of next month’s meeting between presidents Donald Trump and Xi Jinping at the Group of 20 summit in Buenos Aires.
U.S. crude inventories probably rose by 3.2 million barrels last week, according to a Bloomberg survey of analysts. Meanwhile, supplies at the key storage hub in Cushing, Oklahoma, expanded by an estimated 2.1 million barrels, according to a separate forecast compiled by Bloomberg.
The American Petroleum Institute is scheduled to release its weekly count of stockpiles later Tuesday, followed by the U.S. government tally on Wednesday.
Other oil-market news: Gasoline futures fell 0.8 per cent to US$1.8109 a gallon. Just days after major oil companies kicked off earnings season, the industry’s renewed devotion to financial restraint may be a bust. More than half the executives in a Deloitte LLP survey plan to boost budgets next year. BP Plc is gearing up to leave European competitors in the dust, at least when it comes to spending the industry’s enormous cash pile.