Crude Oil Dips as China Plans Tariffs to Counter Trump
(Bloomberg) -- Crude fell as intensifying tariff threats between the U.S. and China raised demand concerns.
Futures slipped 0.7 percent on Friday and closed down for a fifth straight week, the longest stretch of weekly losses since September. An escalating trade war between Beijing and Washington has investors worried about a slowdown in economic activity and oil consumption. China plans to levy tariffs on about $60 billion of U.S. goods, which would go into effect as soon as the U.S. enacts its own measures. Crude oil wasn’t included in the list of products potentially affected.
“Commodities take the trade wars the hardest,” said John Kilduff, a partner at New York-based hedge fund Again Capital LLC. “As this trade war escalates, WTI could really be hit as a result.”
After last month’s decline, crude is off to a rocky start in August amid a trade spat between the U.S. and China. Duties ranging from 5 percent to 25 percent will be levied on 5,207 kinds of American imports if the U.S. delivers its proposed taxes on another $200 billion of Chinese goods, China’s Ministry of Finance said in a statement on its website late Friday.
The country’s largest refiner, Sinopec, will hold off buying U.S. crude as tariff threats raise the prospect of more expensive American imports, according to a person familiar with the matter.
West Texas Intermediate crude for September delivery slid 47 cents to settle at $68.49 a barrel on the New York Mercantile Exchange. Prices fell 0.3 percent this week. Total volume traded Friday was about 44 percent below the 100-day average.
Brent for October settlement declined 24 cents to end the session at $73.21 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a $5.86 premium to WTI for the same month.
Meanwhile, focus also remains on U.S. President Donald Trump’s sanctions on Iranian crude and how that might affect the market moving forward. The U.S. has been unable to persuade China to cut Iranian oil imports, according to two officials familiar with the negotiations.
“The biggest overhang is actually what’s going on between China and Iran and the idea that we’re struggling to get people to join the sanctions camp on Iranian crude,” said Rob Haworth, who helps oversee $151 billion at U.S. Bank Wealth Management in Seattle. “That’s leaving some room for Iranian production to stay a little higher than people may have anticipated.”
Other oil-market news:
- Gasoline futures fell 0.1 percent to settle at $2.0655 a gallon.
- Money managers boost bullish ICE Brent crude oil bets by 4,706 net-long positions to 372,346, weekly ICE Futures Europe data on futures and options show.
- The U.S. oil rig count dropped by 2 rigs, according to Baker Hughes data released on Friday.
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