Crude’s rout deepened, tumbling more than 5 per cent in two days, as the collapse of key price levels watched by technical traders compounded concerns about anemic demand growth and swelling global oil supplies.

Futures in New York fell as much as 1.5 per cent on Tuesday. Crude dipped below its 50-day moving average during Monday’s sell-off and careened toward the 100-day average as the next trading session commenced. Major oil producers including Libya, Saudi Arabia and the U.S. are raising output at a time when the U.S.-China trade dispute threatens to dash growth in energy demand.

“There is a potential to be in an oversupplied market where Saudi is going to pump as much as they can,” said Tariq Zahir, a commodity fund manager at Tyche Capital Advisors LLC. “It’s going to take a supply outage for prices to go significantly higher.”

U.S. political decisions are helping make volatility the new normal in the global oil market, according to Goldman Sachs Group Inc. The potential release of crude from America’s emergency stockpile, signs that Saudi Arabia is responding to increased pressure from President Donald Trump to pump more, as well as uncertainty over the timing of a potential drop in Iranian exports due to sanctions means changes in production will be exacerbated by decisions made in the White House, Goldman said.

A measure of oil market volatility touched the highest in almost a year on Monday.

Key Technicals

West Texas Intermediate crude for August delivery slid 65 cents to US$67.41 a barrel at 9:59 a.m. on the New York Mercantile Exchange. August WTI options expire Tuesday. Total volume traded was about 2 per cent above the 100-day average.

After Brent settled below its 100-day moving average on Monday for the first time since March, WTI is following suit. The U.S. benchmark crude is hovering just above its 100-day moving average. Settlements below these levels are typically seen as bearish.

Brent for September settlement added 8 cents to US$71.92 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a US$5.19 premium to WTI for the same month.

The Brent market is also showing signs of weakness, with front-month Brent futures trading at a discount to the second-month contract.

In the U.S., crude stockpiles dropped by an estimated 4.2 million barrels last week, according to a Bloomberg survey of analysts ahead of an Energy Information Administration report on Wednesday. Supplies at the biggest U.S. pipeline hub in Cushing, Oklahoma, probably fell by 700,000 barrels last week, according to a separate Bloomberg forecast.

The industry-funded American Petroleum Institute will release its weekly tally of inventories later on Tuesday.

Other oil-market news:

Gasoline futures added 0.5 per cent to US$2.0115 a gallon. Intercontinental Exchange Inc. is planning a new crude oil futures contract with physical delivery in Houston, the company said. Russia raised production to 11.22 million barrels a day in the first half of this month, 273,000 barrels a day more than the level it agreed on with OPEC in 2016, Interfax reported.