Oil prices drop three per cent to $70

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Oil futures sank yesterday as an unexpected build in United States (U.S.) crude stockpiles compounded investor worries that a prolonged trade war between Washington and Beijing could dent crude demand.

U.S. West Texas Intermediate crude futures for July delivery slumped $1.92, or three per cent, at $61.21. Brent crude futures went down $1.52, or 2.1 per cent, at $70.66 at barrel.

U.S. crude inventories swelled by 4.7 million barrels in the latest week to their highest since July 2017, the U.S. Energy Information Administration reported. Analysts polled by Reuters had forecast a decrease of 599,000 barrels as refineries cut output.

“It’s at the extreme end of the range of possibilities for a bearish report. It’s about as bad as it could have been considering the fact that driving season is so close,”  said Bob Yawger, director of futures at Mizuho, New York.

Gasoline stocks posted a surprise build as well, rising by 3.7 million barrels compared with analysts’ expectations for an 816,000-barrel drop.

The prospect of a long-term tariff fight between China and the U.S. also pressured prices. No further talks between top officials have been scheduled since the last round ended in a stalemate on May 10.

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