April 4 (UPI) -- Fears of a trade war between the largest economies in the world, China and the United States, sent crude oil prices following stock futures lower on Wednesday.
The Chinese government said Wednesday it introduced a list of U.S. products worth $50 billion in imports that would be the subject of stiff tariffs. The Chinese Ministry of Finance said the decision was a tit-for-tat response to trade actions taken by U.S. President Donald Trump.
Washington "severely infringed on the legitimate rights and interests that China enjoys in accordance with the World Trade Organization rules, and threatened China's economic interests and security," the Chinese Commerce Ministry was quoted as saying in the official Xinhua News Agency.
Trump, through his official Twitter account, said his county wasn't in a trade war with China.
"That war was lost many years ago by the foolish, or incompetent, people who represented the U.S.," he stated.
A 25 percent tariff on U.S. soybeans was the most serious Chinese target. All major indices in the U.S. market were pointing to a down day in trading Wednesday, with the Dow Jones Industrial Average looking at a 400 point drop.
Matthew Smith, the director of commodity research at ClipperData, told UPI that fears of a trade war were spilling over from the equities markets into commodities, noting that all assets tend to correlate in times of crisis.
"Crude is getting swept up in broader market sentiment, given both the direct and indirect impact that a trade war could have on the oil market," he said.
The price for Brent crude oil was down 1.8 percent as of 9:15 a.m. EST to $66.89 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 2 percent to $62.22 per barrel. Crude oil prices dropped as much as 3 percent during Monday trading, but recovered somewhat in the Thursday session.
Brent crude oil prices had flirting with $70 per barrel at several points so this year.
Data from commodity pricing group S&P Global Platts suggested the oil market was in relative balance, following years of oversupply pressure on the price of oil. The American Petroleum Institute reported total U.S. crude oil inventories declined, but swelled at the main storage hub in Cushing, Okla. Gasoline inventories swelled by 2.2 million barrels as refineries shift to a summer blend of gasoline.
The price of oil may move in either direction later in the trading session depending on how official U.S. federal data lines up with API or Platts.