Oil slid to a six-month low as signs of economic weakness in the world’s two biggest crude consumers fanned concerns that US tariffs will sap global energy demand.
West Texas Intermediate dipped 1.5% to end the session near $66 a barrel, the lowest settlement price since September. US equities tumbled sharply on Monday and have erased all of their gains since Donald Trump was elected president as his trade actions threaten economic growth. Meanwhile, China’s consumer inflation fell more than expected and was below zero for the first time in 13 months.
Crude has been hit by a confluence of bearish factors, including the escalating global trade war, plans by OPEC and allies to increase production and talks to end the three-year war in Ukraine. That’s spurred speculators to cut net-bullish bets on global benchmark Brent by the most since July, although they also slashed bearish wagers against US crude.
In the US, Trump told Fox News the economy faces a “period of transition” after his actions on tariffs, while avoiding projections of a recession. On Friday, Federal Reserve Chair Jerome Powell acknowledged the rise in uncertainty, but said officials didn’t need to rush to cut rates.
The previous week “delivered a year’s worth of economic turbulence,” JPMorgan Chase & Co. analysts said in a note to clients. Despite some relief from a delay to tariffs against Canada and Mexico, “the risk of ‘US extreme policies’ scenario has risen, triggering one of the sharpest unwinds in the crowded momentum factor.”
Carlyle Group Inc.’s Jeff Currie wrote in a research note Monday