Oil down to 2-week low as China retaliates in US trade war

LONDON: Oil fell after China said it would levy tariffs on US$50bil of US imports in retaliation against measures by President Donald Trump, fanning concerns that economic growth and fuel demand could be hurt.

Futures in New York slipped as much as 2.1% to the lowest intraday price since March 20. China’s Ministry of Commerce said it would levy 25% tariffs on imports of 106 US products including automobiles and aircraft. That wiped out earlier support for oil prices as output from the Organisation of Petroleum Exporting Countries dropped to the lowest in a year.

“It’s only logical to see profit-taking in light of looming trade tensions and possible financial-market turbulence,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.

Global equities sank after China unveiled its charges, which match the scale of proposed US tariffs announced earlier this week and ratchet up tension in a brewing trade war between the world’s two largest economies. With products from gas turbines to steel and aluminum affected, the spat threatens to raise costs, slow economic growth and erode oil demand.

West Texas Intermediate for May delivery was at US$62.53 a barrel on the New York Mercantile Exchange, down 98 US cents, at 8:34am local time yesterday, after rising 50 US cents on Tuesday. Total volume traded was 11% above the 100-day average.

Brent for June settlement lost 89 cents to US$67.23 a barrel on the London-based ICE Futures Europe exchange, after adding 48 cents on Tuesday. The global benchmark crude traded at a US$4.72 premium to June WTI. — Bloomberg