Oil Hits One-Week Low as Trump Tweet Fuels Market ‘Bloodbath’

Oil futures fell as much as 4.1% in New York on Tuesday.

04 Sep 2019, 09:51 AM IST

Oil Hits One-Week Low as Trump Tweet Fuels Market ‘Bloodbath’

An oil tanker in the Mediterranean sea is silhouetted against the hazy sky in the waters off the coast of Gibraltar. (Photographer: Marcelo del Pozo/Bloomberg)

(Bloomberg) -- Oil slid to the lowest in a week amid U.S. President Donald Trump’s dire trade warning to China and a surprise cutback in American manufacturing.

Futures fell 2.1% in New York on Tuesday. Trump tweeted that China will have a much tougher time securing a trade deal if the Asian nation waits until after the 2020 U.S. presidential election and he wins. Crude also was undermined by plunging gasoline futures as Hurricane Dorian threatened the U.S. East Coast and prompted evacuation orders from Florida to the Carolinas.

The futures market “looks like a bloodbath,” said Phil Streible, senior market strategist at RJO Futures in Chicago, who predicted U.S. crude prices may dip below $50 a barrel. “The fundamentals aren’t strong.”

Further fueling worries over the state of the crude market, OPEC’s monthly output rose slightly in August, a Bloomberg survey showed. The group and its partners -- a 24-nation coalition known as OPEC+ -- had agreed to cut output by 1.2 million barrels a day at the start of this year.

West Texas Intermediate for October delivery declined $1.16 to settle at $53.94 a barrel on the New York Mercantile Exchange. Trades made on Monday are being booked for settlement on Tuesday because of the U.S. Labor Day holiday.

Brent for November settlement fell 40 cents to end the session at $58.26 a barrel on the ICE Futures Europe Exchange, the lowest in more than two weeks. The global benchmark crude sold at a $4.50 premium to New York futures for the same month.

The U.S. and China have failed to agree in the past week on at least two requests -- an American appeal to set some parameters for the next round of talks and a Chinese call to delay new tariffs, said two people who asked not to be identified as the discussions were private.

Other oil-market news:
Gasoline futures fell 8.9% to settle at $1.4705 a gallon, the lowest level since February. Saudi Arabia removed Energy Minister Khalid Al-Falih from his position as chairman of Saudi Aramco, the second time his role has been scaled back in less than a week, as the government prepares to sell shares in the state-owned oil company. Venezuelan exports of crude, which bankroll the regime of President Nicolas Maduro, slumped to a 16-year low in August as buyers including India’s Reliance Industries Ltd. curbed purchases. Concho Resources Inc. agreed to sell some New Mexico assets and buy back as much as $1.5 billion of its shares as the third-largest Permian Basin oil producer tries to win back investors.

Other oil-market news:

Gasoline futures fell 8.9% to settle at $1.4705 a gallon, the lowest level since February.
Saudi Arabia removed Energy Minister Khalid Al-Falih from his position as chairman of Saudi Aramco, the second time his role has been scaled back in less than a week, as the government prepares to sell shares in the state-owned oil company.
Venezuelan exports of crude, which bankroll the regime of President Nicolas Maduro, slumped to a 16-year low in August as buyers including India’s Reliance Industries Ltd. curbed purchases.
Concho Resources Inc. agreed to sell some New Mexico assets and buy back as much as $1.5 billion of its shares as the third-largest Permian Basin oil producer tries to win back investors.

--With assistance from James Thornhill and Sharon Cho.

To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Carlos Caminada