(Bloomberg) -- Crude posted its worst week in two months as escalating trade tensions between the world’s foremost economies threatens growth that drives energy demand.
Futures tumbled 2.3 percent in New York on Friday, pushing the weekly loss to 4.4 percent. In the latest salvo between U.S. and Chinese leaders, President Donald Trump told a New York radio program that Americans may have to endure “a little pain” if the dispute turns into an all-out trade war. China vowed to “retaliate immediately” if Trump broadens his tariff list.
“The concerns surrounding the impact of a potential trade war on economic growth and energy demand has spilled into the market,” said Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut. “We’ve see-sawed back and forth all week on that.”
Oil also slid this week as U.S. drillers expanded crude production and inventories at the biggest American storage complex in Oklahoma swelled. Money managers cut bullish bets on Brent crude for the first time in four weeks.
Meanwhile, Russian Energy Minister Alexander Novak said his nation’s alliance with OPEC, whose historic joint output cuts have helped support oil above $60 a barrel, may last “indefinitely.”
West Texas Intermediate for May delivery slid $1.48 to settle at $62.06, the lowest in more than two weeks, on the New York Mercantile Exchange.
Brent for June settlement declined $1.22 to end the session at $67.11 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $5.01 premium to June WTI.
The S&P 500 Index fell as much as 2.9 percent, halting a three-day rally. Diesel futures and copper also declined as trade-war fears bled across commodity markets.
“The oil market is caught up in these trade war fears that are gripping all the markets,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund. “It’s obviously a set-up that would be damaging to global economic activity and energy demand.”
- Gasoline futures fell 1.4 percent to settle at $1.9547 a gallon.
- The U.S. oil rig count rose by 11 rigs to 808, the highest since March 2015, according to Baker Hughes data Friday.
- The U.S. Treasury Department sanctioned Russian individuals, officials and companies over “worldwide malign activity,” according to a statement.
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