Oil prices continue their slide on fears that the U.S. China Trade War will continue and derail economic and oil demand growth. The Wall Street Journal reported that China guided the yuan to its weakest official level in a decade on Tuesday—a move that could fuel expectations of a further, self-reinforcing slide. TheWSJ says that the yuan’s depreciation puts pressure on Chinese policy makers, who want to give investors a bigger say in determining the currency’s value but appear uncomfortable with letting the yuan fall beyond a symbolic seven to the dollar. The recent slide has reignited speculation about whether further weakness could spark capital flight, which would, in turn, exacerbate the currency’s swoon. The central bank set the dollar’s reference rate at 6.9574 yuan, putting the Chinese currency at its weakest since May 2008. The yuan slid to a decade low once mainland trading started 15 minutes later, with one dollar buying as many as 6.9724 yuan, according to Wind. This devaluing of the currency to try to boost Chinese exports may draw the ire of President Trump.

This move comes as the stock market got rattled on a report that the Trump Administration was preparing new tariffs on China. Bloomberg News reported that the tariffs would hit all remaining Chinese imports if talks next month between presidents Donald Trump and Xi Jinping fail to ease the trade war, three people familiar with the matter said. Yet, markets bounce back after an exclusive interview with FOX News channel’s  Laura Ingraham, where he said that he thinks there will be “a great deal” with China on trade but did suggest that if they do not get a deal more sanctions are possible. After those comments, the market came back but is still infused with nervousness and fear.

That fear is weighing on oil even as stocks tried to make a recovery. The market went from fears of shortages to fears of oversupply in just a few weeks and the truth is probably somewhere in the middle. Despite all the negativity on future oil demand and the possibility that oil supply will rise this week, the increase in supply will stop shortly. We will, within a few weeks, go back to drawdown mode and those draws will be very large. We had better hope that demand slows because despite the recent sell-off demand has failed to fall. If we get a cold start to winter, we will be scrambling to secure enough barrels. The Shale producers will do their part, but they won’t be a lot of help with heavy distillates. While we may see a glut of gas, jet fuel, and heating fuel will be tight. Users need to be hedged.