Oil Prices Hit 2-Month Low as Stockpiles Play to Trade War Fears
- Crude oil prices fell sharply to their lowest since March on Thursday, as another surprisingly strong increase in U.S. stockpiles last week eased market fears about short-term supply risks, and let worries about the U.S. China trade war and its impact on longer-term demand to reassert themselves.
At 9:45 AM ET (1345 GMT), U.S. WTI crude futures were down over $2 a barrel, or 4.2%, at $58.84, breaching the $60 level for the first time since March 28. The international benchmark Brent blend traded down 3.5% at $68.52 a barrel.
The slide had already started late on Wednesday after the U.S. government revealed that crude inventories had risen by 4.74 million barrels, rather than the 600,000 barrel decline that had been expected. Stocks of gasoline and other distillates also rose, counter to expectations.
The rout continued as more harsh rhetoric from China on trade, coupled with weaker-than-expected business surveys in Germany revived fears for the health of the global economy. The International Monetary Fund then rammed home the point with a blog arguing that "the latest escalation (of the U.S.-China trade war) could significantly dent business and financial market sentiment, disrupt global supply chains, and jeopardize the projected recovery in global growth in 2019."
The Fund added that "Consumers in the US and China are unequivocally the losers," facing higher prices across the board for imported goods.
Earlier, Reuters had reported that Asian refiners may cut production in response to refining margins falling to their lowest level in 16 years. That comes on the back of anecdotal reports of increased Chinese gasoline exports in recent weeks, something that speaks to a shortfall in demand at home.
Gasoline futures meanwhile fell 3.0% to $1.9303, their lowest since early April.
Natgas futures, by contrast, edged up 0.6% to $2.56 per million British thermal units.