BURLINGTON, Vt. (DTN) -- Crude oil and oil products futures were posting massive losses Thursday morning, with July New York Mercantile Exchange West Texas Intermediate sinking more than $3 bbl on trade tensions between the United States and China, as well as growing supply.
At last check, NYMEX July WTI tumbled more than $3 to $58.36 bbl while June RBOB futures slid 7.20 cents to $1.9192 gallon and June ULSD futures sank 6.88 cents to $1.9803 gallon.
According to reports, the reasons behind the sudden rush to the exits, not only in oil, but across the financial market horizon is the flare-up in trade tensions between the world's largest economies, U.S. and China. This has raised doubt about the near-term appetite for crude if a tariff conflict remains unresolved for a protracted period.
Commodity investors fear that those tariff tensions could intensify a deceleration of the global economy that appears to already be at hand in Europe. U.S. stock-market indexes, the Dow Jones Industrial Average and the S&P 500 index were off sharply, while stocks in Europe and Asia were in retreat mode.
On the supply-demand side, crude's downdraft took flight on Wednesday as the Energy Information Administration reported that U.S. crude supplies rose by 4.7 million barrels for the week ended May 17, marking a second weekly climb in a row and up over 10 million bbl in that period.
Barclays acknowledges the risk of a worsening economic backdrop due to a higher U.S. dollar poses a key threat to previous bank forecasts.
G. Bud deGorgue can be reached at email@example.com
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