Oil Prices Drop by about 2% and Brent Crude Settles at $70.99 a Barrel

May 23, 2019

Oil prices fell about 2% on Wednesday as an unexpected build in U.S. crude inventories compounded investor worries that a trade fight between Washington and Beijing could dent crude demand over the long haul.

Brent crude futures settled at $70.99 a barrel, dropping $1.19, 1.7%, while U.S. West Texas Intermediate (WTI) crude futures ended $1.71, or 2.7%, lower at $61.42 a barrel.

The U.S. Energy Information Administration reported that U.S. crude inventories swelled by 4.7 million barrels in the latest week to their highest since July 2017 at 476.8 million barrels.

The prospect of a long-term tariff war between China and the United States also pressured prices. Additional talks between top officials have not been scheduled since the last round ended in a stalemate on May 10, when U.S. President Donald Trump imposed the higher levies on Chinese goods.

The conflict is weighing on economic growth forecasts and oil demand predictions. The Organization for Economic Co-Operation & Development (OECD) on Tuesday revised down its global growth forecast for the year.

Growing tensions between the United States and Iran, which could lead to supply disruptions, helped limit losses.

The prospect that the Organization of the Petroleum Exporting Countries and its allies will continue its output cut pact later in the year was also supportive.

(Reuters)