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article imageOil plunges five percent over US-China trade war, stockpile surge

By Karen Graham     May 23, 2019 in Business
Wall Street is finally coming to grips with the idea that the US-China trade war is going to get much worse before it gets better. The DOW fell nearly 300 points today, dragging oil prices down five percent, while China-sensitive stocks took a tumble.
The stock market continued its volatile downward spiral on Thursday fueled by fears of a worsening trade war between the U.S. and China. The Dow Jones Industrial Average fell 430.43 points, before ending the day with a 1.1 percent loss at -286.14 points. The S&P 500 lost 34.03 points or 1.2 percent, and the Nasdaq composite dropped 122.56 points or 1.6 percent.
In Toronto, the benchmark S&P/TSX composite index fell one percent to 16,164.61 points, according to CBC Canada.
As if things weren't discouraging enough, data from IHS Markit showed U.S. manufacturing faltered in May, with new orders falling for the first time since August 2009.
"We're going to see a drift lower until there's a resolution of what's happening with China," said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. "If you're trading, it's not a bad idea to put yourself on the sidelines and sit it out."
Cooperation between Russia and OPEC has helped keep the outlook sunny for oil producers
Cooperation between Russia and OPEC has helped keep the outlook sunny for oil producers
TOBIAS SCHWARZ, AFP/File
Oil prices take a plunge
Oil prices tumbled more than 5 percent, according to Reuters, leading crude benchmarks to their biggest daily loss in six months when OPEC began production cuts in December.
The escalating trade war, along with huge crude stockpiles and weaker refinery demand all played a role in the market upset. West Texas Intermediate (WTI) crude fell below key $60 per barrel support, trading down $ 3.14, or 5.1 percent, at $58.28 per barrel by 11:15 AM ET (15:15 GMT), reports Investing.com.
London Brent, the global benchmark for oil, lost its $70-per-barrel perch, falling $3.13, or 4.4 percent, to $67.86 per barrel. The energy sector was the worst performer in the S&P 500, tumbling more than 3 percent. Concho Resources (CXO), Devon Energy (DVN) and Marathon Oil (MRO) fell 5 percent or more.
Just a portion of the ExxonMobil oil refinery in Baton Rouge  Louisiana  the nation s fourth largest...
Just a portion of the ExxonMobil oil refinery in Baton Rouge, Louisiana, the nation's fourth largest.
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Oil stocks have been teetering since Monday when President Donald Trump moved to block Chinese technology giant Huawei from the U.S. market as an extension of the tariffs he had been piling on China. This issue was further fueled by data from the U.S. Energy Information Administration (EIA) that showed a surprising crude oil stockpile buildup of about 5 million barrels for the second week in a row.
This was not good news after it was also learned there was a slowdown of U.S. refinery runs, despite the fact that we are coming up on the long Memorial Day weekend, the start of peak summer driving activity in the U.S. The EIA also said total motor gasoline stockpiles have increased by 3.7 million barrels during the week ended May 17, against forecasts for a drop of nearly 816,000 barrels.
But despite analysts calling the plunging oil prices a "bloodbath," the WTI is still showing a year-to-date gain of 28 percent, while London Brent is up 26 percent this year.
More about Stock markets, uschina trade war, oil stockpiles, slow refining, Economic growth
 
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