Oil prices slide as U.S.-China trade war escalates
Oil prices fell on Friday after China unveiled retaliatory
tariffs against about $75 billion worth of U.S. goods including crude oil,
another escalation of a protracted trade dispute between the world’s two
largest economies.
Brent crude futures fell 58 cents, or 1%, to settle at $59.34 a
barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.18, or 2.1%,
to settle at $54.17 a barrel.
WTI lost 1.3% for the week,
while Brent rose 1.2% during the week.
China’s commerce ministry
said it would impose additional tariffs of 5% or 10% on a total of 5,078
products originating from the United States, including crude oil, agricultural
products such as soybeans, and small aircraft.
In retaliation, U.S.
President Donald Trump said he was ordering U.S. companies to look at ways to
close operations in China and make products in the United States.
“We still view the
U.S.-Chinese trade standoff as a major bearish consideration that will likely
be requiring additional downward oil demand adjustments as this year proceeds,”
said Jim Ritterbusch, president of Ritterbusch and Associates.
Investors also focused on a
speech by U.S. Federal Reserve chair Jerome Powell at an annual economic
symposium in Jackson Hole, Wyoming.
The U.S. economy is in a
“favorable place” and the Federal Reserve will “act as appropriate” to keep the
current economic expansion on track, Powell said.
The remarks gave few clues
about whether the central bank will cut interest rates at its next meeting.
St. Louis Federal Reserve
Bank President James Bullard said policymakers will have a “robust debate”
about cutting U.S. interest rates by half a percentage point at their next
policy meeting in September.
GRAPHIC: Wall Street vs the
Fed - here.jpg
Exacerbating concern over the
possibility of recession, U.S. manufacturing industries registered their first
month of contraction in almost a decade.
“Some have blamed the
hesitant tone (for oil prices) on an end-of-summer lull. Yet, in truth, the
sense of unease stems from ongoing worries about the global economy,” said
Stephen Brennock of oil broker PVM.
Tensions in the Middle East
have kept investors on edge as well. Iran’s foreign minister said talks held on
Friday with French President Emmanuel Macron about a landmark 2015 nuclear deal
were “productive.”
Iran has said it will scale
back compliance with the pact unless the Europeans find a solution enabling
Tehran to sell its oil despite U.S. sanctions.
U.S. energy firms this week
cut the most oil rigs in about four months, with the rig count falling to the
lowest since January 2018, as producers cut spending on new drilling and
completions.
Hedge funds and other money
managers raised their bullish wagers on U.S. crude to a three-month high in the
latest week, the U.S. Commodity Futures Trading Commission (CFTC) said.
The speculator group raise
its combined futures and options position in New York and London by 17,541
contracts to 217,104 during the week ended Aug. 20.