Crude oil prices plunge by 5% on rising trade war fears

Oil prices are on course for their biggest weekly loss this year as rising inventories and fears of a further escalation in the ongoing US-China trade war wiped nearly 5% off the value of Brent crude on Thursday.

The international benchmark fell by 4.7% to close at US$67.76 per barrel yesterday, while US West Texas Intermediate swung to a 5.7% loss, trading at $57.91 per barrel at close. Brent crude did recoup around 1% on Friday, but is still on track for its biggest weekly loss of 2019.

While the ongoing trade dispute between the US and China stokes fears of a global economic slowdown, analysts also referenced weakening US data and rising US crude stockpiles as factors in the downward movement of oil prices this week.

“Increasing inventories and slumping US manufacturing activity exacerbated trade related concerns about global demand,” said Michael McCarthy, chief market strategist at CMC Markets in Australia.

With no resolution in sight between the US and China, analysts expect further downward plunges in financial markets, including crude oil futures.

“Without a resolution to the ongoing trade dispute quickly, which now looks very unlikely, oil could struggle to push higher,” said Jasper Lawler, Head of Research at futures brokerage London Capital Group.

“We expect rallies in oil to be short lived,” he added.