Sunday , May 28 2023

Oil prices fall while trade military problems hit demand


Monday's prices fell on Monday due to renewed global economic growth concerns after US President Donald Trump threatened to escalate a trade war with China at higher tariffs, which could limit fuel demand at the world's two largest crude consumers.

Brent futures fell US71 cents, or 1.15 percent, to US $ 61.18 a barrel at 0840 GMT.

U.S. West Texas International (WTI) crude futures also dropped US71 cents, or 1.28 percent, to $ 54.95 a barrel.

"One man, one tweet. That's all it takes for oil prices to suffer their sharpest daily decline in several years," PVM Oil Associates analyst Stephen Brennock said of Trump.

Both crude benchmarks fell last week, with Brent down 2.5 percent and U.S. crude falling 1 percent, after falling more than 7 percent on Thursday following Trump's tweet to the lowest level in about seven weeks.

"The scenario is set for a fierce trade war between the two sides. The prospect of a escalating trade war does not favor the terrible world economic outlook."

Asian equity markets fell to a six-month low on Monday as gold prices climbed as investors searched for safe haven assets.

Trump last week said he would impose a 10-percent tariff on about $ 300 billion in U.S. imports since Sept. 1, saying he could lift duties further if Chinese President Xi Jinping does not make progress on a trade deal.

The announcement extends US tariffs to almost all Chinese products. China on Friday pledged a backlash against Trump's decision, a move that ended a month-long trade pause.

On Monday, China let the yuan tumble beyond the key 7-dollar level for the first time in more than a decade, signaling Beijing may tolerate further monetary weakness due to the trade dispute.

Lower Yuan will raise the costs of dollar-denominated oil imports into China, the world's largest importer of crude oil.

Signs of rising oil exports from the US also pushed up prices on Monday. US shipments of about 260,000 barrels per day (bpd) in June to a monthly record of 3.16 million bpd, US Census Bureau data showed on Friday.

The US weekly oil report, an indicator of future production, fell for a fifth week in a row, as most independent producers cut spending, although larger ones were still pushing investments in new drilling.

An Iranian seizure of an Iraqi oil tanker has raised some concerns about possible Middle East supply disruptions in the Gulf, with Iranian state media reporting on Sunday that its Iranian Revolutionary Guards had seized the ship because of smuggling fuel.


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