Trump Tweets Crush Oil Market as Prices Fall Nearly 8%

Oil prices sank almost 8% Thursday, their biggest drop since February 2015, after President Trump announced new tariffs on Chinese imports, stoking fears that the trade dispute between the two countries will drag on, crimping global growth.

West Texas Intermediate, the U.S. benchmark for crude prices, settled 7.9% lower at $53.95 a barrel on the New York Mercantile Exchange. The last time prices fell by roughly this much was more than four years ago, when waves of new production from U.S. shale drillers flooded the market. Brent, the global reference price, tumbled 7% to $60.50 on Thursday.

Mr. Trump said on Twitter Thursday afternoon that tariffs of 10% would be applied on an additional $300 billion of Chinese goods and products starting Sept. 1. Oil prices had been down earlier in the day as the U.S. dollar strengthened after the Federal Reserve disappointed investors Wednesday by failing to explicitly confirm expectations of additional stimulus in the months ahead.

Shares of oil producers also plunged Thursday, with many stocks losing more than 10% in trading reminiscent of Black Friday 2014, when oil prices tumbled into a multiyear slump after the Organization of Petroleum Exporting Countries initiated a price war with U.S. shale producers.

Whiting Petroleum

, which drills in North Dakota, fell 39%.

Concho Resources

a major West Texas producer, lost 24%.

California Resources

declined 17%.

The market had been stuck in a range, trading between $55 and $60 a barrel in recent weeks, even amid attacks near and in the Strait of Hormuz, a major oil passageway. Worries about disruptions to the global flow of crude were offset by concerns that the U.S.-China trade dispute will weigh on business growth and dent demand for oil.

“The Fed disappointed some earlier and then today it was the Trump tweet,” said Kyle Cooper, a consultant with Ion Energy Group. Mr. Cooper said global trade concerns are outweighing oil-supply data that many traders otherwise viewed as bullish. “It goes to show the influence of the risk-on, risk-off mentality, and that is being driven largely by the status of the U.S.-China trade negotiations.”

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