SINGAPORE: Brent and WTI crude oil futures dipped on Monday as concerns of a looming trade dispute between the United States and China weighed on global markets. In Asia, Shanghai crude oil futures debuted strongly in terms of volume as investors and commodity merchants bought into the world’s newest financial oil trading instrument.
Looming over oil markets, however, was the possibility of a full-blown trade war between the United States and China battered Asian shares on Monday. The falls came after US President Donald Trump last week signed a memorandum that could impose tariffs on up to $60 billion of imports from China.
This weighed on crude oil futures as well. US West Texas Intermediate (WTI) crude futures were at $65.59 a barrel at 0700 GMT, down 29 cents, or 0.4 per cent, from their previous close.
Brent crude futures were at $70.23 per barrel, down 22 cents, or 0.3 per cent.
Shanghai spot crude futures jumped to a high of 447.1 yuan ($70.88) per barrel shortly after its debut, before easing back to a close of 429.9 yuan ($68.15) at 0700 GMT.
Beyond trade concerns, crude was pressured by a rise in the number of US rigs drilling for oil to a three-year high of 804, implying further rises in production, which has already jumped by a quarter since mid-2016 to 10.4 million barrels per day (bpd).
Financial oil markets have long been dominated by Europe’s Brent and America’s WTI.
Asia, despite being the world’s biggest and fastest growing oil consumer, has so far not had a benchmark.
That possibly changed on Monday, as China saw the launch of Shanghai crude oil futures.
Few analysts doubt that Asia is overdue a financial oil price benchmark, and that China with its vast consumer and production base is a prime location for it. “China surpassed the US to become the world’s largest importer of crude in 2017. Rightly so, China would want to play a more active role in influencing the price of crude oil,” said Sushant Gupta, research director at Wood Mackenzie. — Reuters
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