Crude dips lower as equities decline ahead of Trump tariff talks

New York - Crude took a turn lower amid an equity selloff largely pinned to concerns over a trade war with China.

Futures edged down by as much as 1.2% in New York on Thursday following two sessions of gains. Global equities declined along with crude oil, as focus shifted to the potential for US President Donald Trump to announce tariffs against China.

Trump is set to announce about $50bn of tariffs against China over intellectual-property violations on Thursday, according to a person familiar with the matter.

"It’s simply a risk-off type of day for all global risk assets," Bob Yawger, director of futures at Mizuho Securities USA in New York, said. "Considering the scope of yesterday’s rally, a little bit of a pullback shouldn’t come as all that much of a surprise."

As crude takes a dip after reaching a six-week high on Wednesday, investors see the move as only a minor blip. The output reductions by OPEC have helped lower inventories, with crude stockpiles in the US falling below the five-year average for the first time since 2014.
Meanwhile, Morgan Stanley sees Brent crude reaching $75 a barrel by the third quarter of this year and also said with inventories low, geopolitical risk tends to be exacerbated.

West Texas Intermediate crude for May delivery dropped 64 cents to $64.53 a barrel at 9:53 a.m. on the New York Mercantile Exchange. Total volume traded was about 13% above the 100-day average.

Brent for May settlement slid 76 cents to $68.71 a barrel on the London-based ICE Futures Europe exchange, and traded at a $4.20 premium to WTI.

The president is considering targeting more than 100 different types of Chinese goods, according to the person, who spoke on the condition of anonymity. The value of the tariffs was based on US estimates of economic damage caused by intellectual-property theft by China, the person said.

Other oil-market news:

Gasoline futures fell as much as 1.2% to $1.9890 a gallon on Thursday. Yemen’s Shiite rebels said they fired a ballistic missile aimed at a Saudi Aramco facility in the border area of Najran, according to a news agency under their control. When oil-rich Abu Dhabi put a string of offshore fields up for auction, suitors from China to Italy vied for a slice of the pie.

Surprisingly, that piece was snatched from one of the world’s largest energy conglomerates. BP missed out on a chance to renew its partnership in oil concessions off the emirate’s shores, which expired this month.