U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Friday amid an escalation of geopolitical events that have raised concerns over the strength of the U.S. economy and future demand. Crude oil is in a position to post its biggest monthly loss since November as trade conflicts spread throughout the globe and U.S. crude production returned to record levels.
Escalating Global Trade Concerns
The U.S. trade dispute with the world escalated on Thursday when President Trump vowed to slap tariffs on all goods from Mexico. This news drove U.S. Treasury yields sharply lower and pressured demand for higher risk assets as investors increased bets that we’re headed into a global economic slowdown or perhaps a recession that could lead to a drop in demand for crude oil.
U.S. Production Rises
Crude oil prices are also being pressured by a much smaller-than-expected decline in U.S. stockpiles. Additionally, the government reported that production returned to its record 12.3 million barrels per day.
On Thursday, the EIA said U.S. crude stocks fell by around 300,000 barrels during the week-ending May 24, to 476.49 million barrels. Traders were looking for a draw of about 900,000 barrels. Late Wednesday, the American Petroleum Institute (API) reported a 5.3 million barrel decline.
Saudis Raise Production
According to a Reuters survey, top oil exporter Saudi Arabia raised production in May, however,…