- US-led protectionism sparks global recession fears, kills risk appetite.
- Further downside likely in play ahead of US inflation and oil rigs count data.
WTI (futures on Comex) gets hammered alongside other higher-yielding assets in a complete risk-averse market environment, with markets scrambling for the safety bets such as gold, the Yen amid heightened global recession fears, fuelled by escalating trade war between US-China and now a new with Mexico.
The US oil lost as much as 3% and tested the 55.00 level, hitting the lowest levels since March, 8th 2019, as markets fretted that a global economic slowdown would dent the demand for the fuel. Adding to this, the Chinese manufacturing sector activity further slowed down in May and accentuated the demand concerns from the world’s no. 2 oil consumer.
Also, the sentiment around the black gold remains tepid after the US EIA crude stocks data showed a smaller-than-expected decline in the US crude inventories. The US crude stocks fell by around 300,000 barrels last week to 476.49 million barrels vs. the 900,000-barrel decline analysts forecast in a Reuters poll.
Amidst widespread risk-aversion, any recovery attempt is likely to be short-lived, as traders await the US macro news and rigs count data due later in the NA session.
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