Oil tumbles 3% on US-China trade worries
Crude futures slumped to two-week lows as the dollar index gained ground, shrugging off earlier data from the US, the world's largest energy consumer, which showed a larger-than-expected inventory drawdown, and after the US threatened a 10% tax on $200 billion worth of Chinese products.
As of 05:02 GMT, US crude futures due on August 15 fell 2.67% to $72.13 a barrel from the opening of $74.11, while Brent futures due on September 15 flagged 3.59% to $76.03 a barrel from the opening of $78.86, as the dollar index added 0.32% to 94.46 from the opening of 94.16.
Earlier US data showed producer prices rose 0.3% in June, slowing down from 0.5% in May and beating estimates of 0.2%, while core prices rose 0.3%, same as before and also beating forecasts of 0.2%.
The final reading for wholesale inventories showed a 0.6% increase, up from 0.5% in the preliminary reading, and 0.1% in April.
Sharp Drawdown
The Energy Information Administration released its report on US crude stocks, showing an extensive drawdown of 12.6 million barrels in the week ending July 6, compared to a 1.2 million buildup in the previous reading, while analysts expected a 4.1M drop, with total stocks now down to 405.2 million barrels, 4% below the five-year average for this time of year.
Gasoline stocks fell 0.7 million barrels, making them 6% above five-year averages, while distillate stocks, including heating fuel, rose 4.1 million barrels, still 12% below the five-year average.
US-China Trade Dispute
US trade representative Robert Lighthizer said a suggested 10% tariff on Chinese products will take up to two months for deliberation to allow public discussion before going into effect.
China imposed tariffs ranging from 33.3% to 78.2% on US optical fiber products this week to counter flooding the market with these imports, up from 4.7% to 18.7% in previous rates.
That comes after US imposed a 25% tariff on $34 billion worth of Chinese products last Friday, with China responding with similar ones.
Global Demand
In its monthly report, OPEC expected a drop in global oil demand next year as consumption slows down as supplies increase, forecasting 32.18 million bpd of demand on OPEC's output, down 760 thousand bpd from this year, while expecting OPEC's production to increase past estimated demand in June to 32.33 million bpd.
US Oil Rig Count
Baker Hughes, a US oil services company, reported an increase of 5 in the American oil rig count for the first time in three weeks to 863 rigs, the highest since March 2015.
US output rose over 29% from mid-2016 levels to 10.9 million bpd, a record high, passing Saudi Arabia's 10.7 million bpd and nearing Russia's 11.1 million bpd.
Wall Street trades lower after US threatens more tariffs on Chinese goods
US stock indices traded lower in the third session of the week after the US threatened to impose tariffs on up to $200 billion worth of Chinese products, rekindling fears of an escalated trade dispute between the two economic giants.
US trade representative Robert Lighthizer said a suggested 10% tariff on Chinese products will take up to two months for deliberation to allow public discussion before going into effect.
China imposed tariffs ranging from 33.3% to 78.2% on US optical fiber products this week to counter flooding the market with these imports, up from 4.7% to 18.7% in previous rates.
That comes after US imposed a 25% tariff on $34 billion worth of Chinese products last Friday, with China responding with similar ones.
US Inflation
Otherwise, earlier US data showed producer prices rose 0.3% in June, slowing down from 0.5% in May and beating estimates of 0.2%, while core prices rose 0.3%, same as before and also beating forecasts of 0.2%.
Federal Reserve Bank of Atlanta President Raphael Bostic is scheduled to speak at the Virginia Society of Certified Public Accountants, while Federal Reserve Bank of New York President John Williams is due to speak about the local economy at a town hall event, in Brooklyn later today.
Stock Performance
As of 02:24 GMT, Standard and Poor's 500 fell 0.36%, or 9.98 points to 2,783.86, while Dow Jones declined 0.56%, or 140.27 points to 24,779.39.
Tech-heavy NASDAQ slipped 0.21%, or 16.57 points to 7,742.62.
Sterling resumes decline from four-week high against dollar
Sterling fell in American trade away from June 14 for the second session out of three versus dollar, ahead of a speech by Bank of England governor Mark Carney about the global financial crisis at the National Bureau of Economic Research conference, in Boston, and following earlier inflation data from the US.
As of 03:23 GMT, GBP/USD slipped 0.29% to 1.3237 from the opening of 1.3275, with an intraday low at 1.3234, and a high at 1.3285.
Brexit Upheaval
Earlier today, UK Prime Minister Theresa May defended her plans for Brexit negotiations, asserting how they seek to achieve what the majority voted for in the Brexit referendum, by ending freedom of movement and taking Britain out of the jurisdiction of the European Court of Justice and stopping the influx of UK money to the EU budget.
The UK government is facing upheaval after two ministers resigned from their posts in protest of Prime Minister Theresa May's handling of Brexit negotiations with the EU, in particular towards her perceived "concessions" with the Union in relation to trade and customs.
US Inflation
Otherwise, earlier US data showed producer prices rose 0.3% in June, slowing down from 0.5% in May and beating estimates of 0.2%, while core prices rose 0.3%, same as before and also beating forecasts of 0.2%.
Federal Reserve Bank of Atlanta President Raphael Bostic is scheduled to speak at the Virginia Society of Certified Public Accountants, while Federal Reserve Bank of New York President John Williams is due to speak about the local economy at a town hall event, in Brooklyn later today.
Euro falls off four-week high versus dollar
Euro fell in American trade off June 14 highs against the dollar, which comes after European Central Bank President Mario Draghi delivered opening remarks at the ECB Statistics Conference, in Frankfurt, and following earlier inflation data from the US.
As of 03:12 GMT, EUR/USD shed 0.17% to 1.1724 from the opening of 1.1744, with a session-low at 1.1695, and a high at 1.1758.
European Central Bank member and Bank of France Governor François Villeroy said a rate hike in the second half of 2019 is possible, but depends on inflation forecasts, while asserting the need to end the assets purchase program next December.
Otherwise, earlier US data showed producer prices rose 0.3% in June, slowing down from 0.5% in May and beating estimates of 0.2%, while core prices rose 0.3%, same as before and also beating forecasts of 0.2%.
Federal Reserve Bank of Atlanta President Raphael Bostic is scheduled to speak at the Virginia Society of Certified Public Accountants, while Federal Reserve Bank of New York President John Williams is due to speak about the local economy at a town hall event, in Brooklyn later today.