Oil sets new 7-month low on trade tensions
LONDON: Oil prices slipped further on Wednesday, extending recent heavy losses as deepening SinoUS trade tensions weighed on the outlook for the global economy and energy demand.
Brent crude futures LCOC1 were down 11 cents, or nearly 2 per cent, at 0823 GMT to set a fresh seven-month low. Prices have lost more than 20 per cent since hitting their 2019 peak in April. US West Texas Intermediate (WTI) crude futures CLC1 were flat at $53.63.
Brent prices have plunged more than 9 per cent over the past week after US President Donald Trump said he would slap a 10 per cent tariff on a further $300 billion in Chinese imports from September 1, sending global equity markets into a tailspin.
“The market continues to grow more uncertain about the demand outlook given the deterioration of trade talks between China and the US,” ING analysts said in a note.
The bank lowered its 2019 price outlook, mostly because of demand concerns, forecasting that global oil supplies will exceed consumption in the first half of next year.
Trump on Tuesday dismissed fears that the trade row with China could be drawn out further. His comments failed to prevent shares in Asia from falling for an eighth straight session on Wednesday.
“The most significant outcome of the ramp-up in tariff measures will be through increased economic and trade uncertainties, negatively impacting physical oil and gas demand and market sentiment,” Fitch Solutions said in a note.
At the same time, geopolitical tensions in the Middle East remain high after Iran seized a number of tankers in recent weeks in the Strait of Hormuz, a major choke point for oil shipments.