Market News

Jacob Wendler and Mia Gindis

(Bloomberg) -- Oil fell after the International Energy Agency warned that consumption is under pressure from the escalating global trade war.

West Texas Intermediate slid to near $67 a barrel, following a 2.2% jump on Wednesday that was its biggest gain in almost two weeks. Global oil supply is likely to exceed demand by about 600,000 barrels a day this year as tariffs weaken macroeconomic conditions, the IEA said. US equities also dropped on uncertainty about the effects of the trade war.

Crude has tumbled from its highs in mid-January as President Donald Trump’s trade policies threaten a wider economic slowdown and reduce the appeal of riskier assets. On the supply side, an OPEC+ plan to boost production and the prospect of Russian barrels returning to the market also are weighing on prices.

Bearish economic projections like the Federal Reserve Bank of Atlanta’s expectation that the US economy will declining at a 1.5% annualized rate this quarter are threatening prices, according to John Kilduff, a partner at Again Capital.

“A negative US economic outlook is problematic for this market,” he said. “That’s really why we’re down near the lower end of the range here at $66. If we break that, we are going to go back down into the $50s.”

US wholesale inflation was unchanged in February amid declining trade margins, though details were less favorable for the Federal Reserve’s preferred inflation gauge.

Top traders echoed expectations of supply outstripping demand at S&P Global’s CERAWeek conference in Houston, warning that prices could slide lower as more barrels come onto the market.

--With assistance from Dani Burger, Alex Longley and Yongchang Chin.