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Crude Oil Sinks as US-China Trade War Escalates

August 23, 2019 at 18:04 by Vladimir Vyun

Futures for crude oil sank today. Natural gas joined the decline, though its losses were nowhere near as big as the ones demonstrated by crude. The main reason for oil’s slump was an escalation of the Sino-US trade war. China responded to US tariffs by its own levies on US imports, and US President Donald Trump threatened to retaliate. The spat between the two world’s biggest economies can have a tremendous adverse impact on the global economy, and crude oil is very sensitive to that kind of risks.

Some market analysts attributed the weakness of crude also to disappointment in the speech of Federal Reserve Chair Jerome Powell. He did not confirm an interest rate cut in September, frustrating many traders who were waiting for such confirmation. Still, it looks like markets bet on a cut next month.

Baker Hughes reported that the number of US oil rigs tumbled by 16 to 754, falling to the lowest level in almost two years. The number of gas rigs fell by 3 to 162. While the news was bullish to crude, the commodity did not respond positively, being dragged down by the negative fundamentals.

Futures for delivery of WTI crude oil in October plunged by 2.96% to $53.71 per barrel as of 17:55 GMT on NYMEX today. Brent crude tanked by 1.77% to $58.86 per barrel on ICE. Natural gas for delivery in September dropped 0.51% to $2.15 per million British thermal units.

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