Oil Falls to Two-Month Low as Global Demand Anxiety Intensifies

Oil Extends Loss on Risks of Escalating Trade War, U.S. Supplies

31 Oct 2018, 08:47 AM IST

Oil Falls to Two-Month Low as Global Demand Anxiety Intensifies

Oil falls onto a filtering screen in a tank inside a processing facility. (Photographer: Brent Lewin/Bloomberg)

(Bloomberg) -- Oil slid to a two-month low as escalating U.S.-China trade tensions threatened global growth at a time when American crude inventories are swelling.

Futures declined 1.3 percent 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, U.S. crude stockpiles rose by 5.69 million barrels last week, according to the industry-funded American Petroleum Institute, yet gasoline and distillate supplies shrunk.

“You’re approaching a level where a lot of traders are looking at value,” said Josh Graves, senior market strategist at RJO Futures in Chicago. “The market is looking at growth potential in the future and trading off of earnings announcements and anything that can give an outlook on what oil prices might be down the road.”

Crude has dropped this month amid worldwide demand fears, which have overwhelmed concerns about supply disruptions in Iran and Venezuela. Yet, at the same time, U.S. crude stockpiles are surging. The Energy Information Administration probably will report on Wednesday that U.S. production has been rising faster than previously forecast, according to Rystad Energy AS.

West Texas Intermediate for December delivery traded at $66.44 a barrel at 4:45 p.m. after ending the session at $66.18 on the New York Mercantile Exchange, the lowest close since Aug. 17.

Brent for December settlement, which expires Wednesday, fell $1.43 to settle at $75.91 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.73 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.

The API was also said to report that gasoline stockpiles fell by 3.46 million barrels, while distillate supplies declined by 3.08 million barrels last week.

U.S. crude inventories probably rose by 3.21 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.

Other oil-market news:
Gasoline futures fell 1 percent to close at $1.8059 a gallon. Hawaii, which already struggles with the nation’s highest electric bills, could see them jump by as much as 20 percent in just two years thanks, oddly enough, to new regulations on fuel use in oceangoing ships. The Bakken shale oil field in North Dakota, the third-largest in the U.S., may be twice as massive as originally thought, according to Continental Resources Inc.

Other oil-market news:

Gasoline futures fell 1 percent to close at $1.8059 a gallon.
Hawaii, which already struggles with the nation’s highest electric bills, could see them jump by as much as 20 percent in just two years thanks, oddly enough, to new regulations on fuel use in oceangoing ships.
The Bakken shale oil field in North Dakota, the third-largest in the U.S., may be twice as massive as originally thought, according to Continental Resources Inc.

--With assistance from Heesu Lee and Grant Smith.

To contact the reporters on this story: Jessica Summers in New York at jsummers24@bloomberg.net;Samuel Robinson in New York at srobinson145@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Joe Carroll, David Marino