Oil plummets on fears of global slowdown

Crude oil prices fell more than 4.3% Wednesday, to a seven-month low, extending recent heavy losses following a surprise build in U.S. crude stockpiles and fears demand will shrink due to Washington’s growing trade war with Beijing.

Brent crude futures dropped 4.4%, to $56.35 a barrel, a seven-month low. Prices have lost more than 20% since their 2019 peak in April, Kallanish Energy reports. U.S. West Texas Intermediate crude futures settled down 4.7%, at $51.09/Bbl. 

Oil fell early on trade war worries, then continued losses after the U.S. Energy Information Administration reported an unexpected 2.38-million-barrel (Mmbbl) increase in U.S. stockpiles, rather than the 2.8 Mmbbl draw analysts had expected.

U.S. crude oil inventories are roughly 2% above the five-year average for this time of year.

Gasoline inventories rose 4.4 Mmbbl, with U.S. Gulf Coast gasoline stocks hitting the highest on record for this time of year, EIA data revealed.

Brent has plunged more than 12% since last week as global equity markets plunged after President Trump said he would place a 10% tariff on $300 billion in Chinese imports beginning Sept. 1.

This week, EIA reduced its forecast U.S. demand for crude and liquid fuels. The agency also cut its forecast for global crude and liquids consumption by 0.1% for both 2019 and 2020.

Meanwhile, U.S. crude production was set to rise 1.28 million Bpd (Mmbpd), to 12.27 Mmbpd this year.

This post appeared first on Kallanish Energy News.