SINGAPORE (Reuters) – Oil prices slumped by around 2 percent on Wednesday, pulled down by swelling U.S. inventories and a plunge in global stock markets as China’s government warned of increasing economic headwinds.
A pump jack lifts oil out of a well, during a sandstorm in Midland, Texas, U.S., April 13, 2018. Picture taken April 13, 2018. REUTERS/Ann Saphir
International Brent crude oil futures LCOc1 were at $60.87 per barrel at 0418 GMT, down $1.21, or 2 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $52.31 per barrel, down 95 cents, or 1.8 percent.
Reuters technical commodity analyst Wang Tao said WTI could soon test support at $51.75 per barrel, while Brent was threatening to drop below $60 per barrel again soon.
Oil prices were pressured by a weekly report from the American Petroleum Institute (API) that said U.S. crude inventories rose by 5.4 million barrels in the week to Nov. 30, to 448 million barrels, in a sign that U.S. oil markets are in a growing glut.
Official U.S. government oil production and inventory data is due later on Wednesday.
More broadly, the slide in U.S. oil followed a tumble in global stock markets on Tuesday, with investors worried about the threat of a widespread economic slowdown.
Key to the global economic outlook will be whether the United States and China can resolve their trade disputes. Washington and Beijing announced a 90-day truce last weekend, during which neither side will further increase punitive import tariffs.
But U.S. President Donald Trump threatened on Tuesday to place “major tariffs” on Chinese goods imported into the United States if his administration didn’t reach a desirable deal with Beijing.
In an unusual move, China’s state council on Wednesday issued guidance to support employment as the economy slows, saying the country should pay “high attention” to the impact on employment from increasing economic headwinds.