Loading...

Oil holds loss as trade war fears spread in market

Apr 03 2018 10:29
Heesu Lee, Bloomberg

Seoul - Oil held losses below $64 a barrel as the risk of a trade war between China and the US rattles a market that’s already grappling with swelling inventories.

Futures were little changed in New York after losing 3% on Monday. China imposed retaliatory tariffs on US goods valued at about $3bn, the latest move in an escalating trade dispute between the world’s largest economies that’s spurring investors to shy away from risk assets. Meanwhile, American crude stockpiles are forecast to have risen for the fifth time in six weeks.

While oil rebounded over 5% last month on rising geopolitical risk surrounding the US and OPEC producer Iran, a rapid increase in American production - which has topped 10 million barrels a day for eight straight weeks - has placed a lid on prices. Investors also worry President Donald Trump’s protectionist policy will lead to further reciprocal tariffs by China, undermining global economic growth.

“The escalating dispute between the US and China over trade is driving oil prices down at the moment and it’s probably an issue that’s hard to resolve in the short term,” Will Yun, a commodities analyst at Hyundai Futures, said by phone. “Along with the ongoing trade war, we have rising US crude stockpiles and production, which will always put downward pressure on prices.”

West Texas Intermediate for May delivery was at $63.19 a barrel on the New York Mercantile Exchange, up 18 cents, at 08:58 a.m. in London. The contract fell $1.93 to $63.01 on Monday, the most since February 9. Total volume traded was about 39% below the 100-day average.

Brent for June settlement added 29c to $67.93 on the London-based ICE Futures Europe exchange. Prices dropped 2.5% to $67.64 on Monday. The global benchmark crude traded at a $4.71 premium to June WTI.

Yuan-denominated oil futures on the Shanghai International Energy Exchange lost 3.3% to 402.8 yuan a barrel. The September delivery contract closed 0.9% lower on Monday after debuting last week.

The US didn’t respond to China’s March 26 request for consultation on Washington’s steel and aluminum tariffs, the Asian country’s Commerce Ministry said in a statement Monday, adding that officials have widespread public support for tougher measures and repeating Beijing’s stance that disputes should be resolved with dialogue.

In America, crude inventories are estimated to have added 2 million barrels last week, according to a Bloomberg survey before Energy Information Administration data due on Wednesday. The nation’s oil production had also increased for a fifth week in the period ended March 23, hitting a fresh record.

Oil-market news:

• Gasoline futures added 0.3% to $1.9724 a gallon, after falling 2.6% on Monday.

• Russia is committed to ensuring a re-balancing of the global oil market, Energy Minister Alexander Novak said on Monday in a statement.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest. 24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

commodities  |  markets  |  oil
NEXT ON FIN24X

 
 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How sincere do you think is President Cyril Ramaphosa?

Previous results · Suggest a vote

Loading...