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Bloomberg
Oil posted its worst May performance in seven years as global trade tensions escalat-ed, undermining the outlook for energy demand growth.
Futures tumbled 5.5 percent in New York to a depth not seen in more than three months. Equities also plunged as investors deserted risky asset classes for the safety of gold and US Treasuries. President Donald Trump’s threat to punish Mexico with tariffs because of illegal immigration darkened already-parlous global trade prospects.
Oil surged more than 40 percent to start the year on the strength of Opec output cuts and crises in Venezuela, Iran and other suppliers.
But since peaking in late April, prices have fallen off more than 19 percent as the US-China trade dispute intensified. A jump in US gasoline stockpiles disclosed in a government report this week added to angst about slackening demand.
The global benchmark cru-de was trading at a premium of $10.99 a barrel to WTI, the widest in almost a year.
China is mobilising its state-run energy industry to prepare for a long struggle with the US, and also has readied a plan to restrict exports of rare earths, according to people familiar with the matter.
“Given oil markets are tethered to the hip of risk markets currently, this is bad news for oil bulls,†said Stephen Innes, head of trading at SPI Asset Management. Fuel consumption in the US has also been artificially depressed in recent weeks by heavy rains and flooding, he said.