BEIJING/SINGAPORE: Oil markets slipped on Tuesday as the latest escalation in the Sino-US trade war clouded the outlook for crude demand from the two countries, the world’s top crude consumers. Brent crude futures had dropped 29 cents, or 0.37 per cent, to $77.76 per barrel by 06:32 GMT. US West Texas Intermediate (WTI) crude was down 15 cents, or 0.22 per cent, at $68.76 per barrel.
US President Donald Trump on Monday said he would impose 10 per cent tariffs on about $200 billion worth of Chinese imports.
“The growing trade dispute has hurt trading sentiment. The impact on economic growth is slowly dripping in, which again hurts oil prices,” Wang Xiao, head of crude research at Guotai Junan Futures, said on Tuesday.
Refineries in the United States consumed about 17.7 million barrels per day (bpd) of crude oil last week, while China’s refiners used about 11.8 million bpd in August, according to government data from the countries.
The tariffs are likely to limit economic activity in both China and the United States. The countries are the world’s two largest economies.
However, potential supply cuts caused by US sanctions on Iran, the third-largest producer among the members of the Organization of the Petroleum Exporting Countries (OPEC), are providing some support for oil prices.
Sanctions affecting Iran’s petroleum sector will come into force from November 4. Meanwhile, oil output from seven major US shale formations is expected to rise by 79,000 bpd to 7.6 million bpd in October, the US Energy Information Administration said on Monday.
Technical analysis from Reuters market analyst Wang Tao showed that US oil prices have repeatedly failed to overcome a resistance level of $69.85 per barrel, signalling a dissipation of positive outlook.
Brent may fall more than $1 to $76.37 a barrel, while WTI crude prices may revisit their on September 14 low of $67.94, he wrote. On Monday, Russia’s Energy Minister Alexander Novak said that OPEC and non-OPEC members would discuss all possible supply scenarios when they meet this month in Algeria.
— Reuters
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