Oil prices fell on Friday along with equities as U.S. President Trump's threat of new tariffs on China reignited fears of a trade war between the world's two biggest economies.
Oil prices fell on Friday along with equities as U.S. President Trump’s threat of new tariffs on China reignited fears of a trade war between the world’s two biggest economies. President Trump said on Thursday he had ordered U.S. trade officials to consider an additional $100 billion tariffs on China, escalating tensions with China.
Brent crude for June delivery was down 38 cents, or 0.6 percent, at $67.95 per barrel by 0143 GMT. U.S. West Texas Intermediate crude for May delivery was down 43 cents, or 0.7 percent, at 63.11 a barrel.
Shanghai September crude futures were untraded due to public holidays in China, after falling 0.8 percent on Wednesday. Shanghai trading will resume on Monday. While oil market watchers were wary of the brewing trade war between the United States and China, they did not expect to see steep falls amid signs of tightening supplies.
“The most recent rumblings from President Trump have seen oil prices fall convincingly, but given the supporting narrative, it should attract some dip buyers,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore.
The Energy Information Administration (EIA) reported a 4.6 million-barrel draw in U.S. crude inventories last week, compared with analysts’ expectations for an increase of 246,000 barrels. “U.S. oil inventories remain a volatile gauge, but they still provide a good litmus test for the short-term,” Innes said.
Meanwhile Saudi Arabia said on Thursday it would raise its official selling price for May crude for Asian customers. “The move…suggests that Saudi Arabia is not looking to remove production curbs anytime soon,” ANZ bank said in a note.
The Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers including Russia are committed to cutting output by around 1.8 million barrels per day through the end of 2018 in a bid to clear a global overhang and support prices. Saudi Arabia, the de facto leader of the oil cartel, has said production cuts could be extended in one form or another.
OPEC and its allies should keep the cuts to ensure healthy price levels as a way to boost investment in the industry and avoid a supply and price shock in the long run, Qatar’s Energy Minister Mohammed al-Sada told Reuters.