Markets

Oil tumbles after China slaps tariffs on U.S. goods

Oil tumbles after China slaps tariffs on U.S. goods

Even after crude was propped up in February by rising geopolitical risks surrounding the United States and Middle East producer Iran, it's still struggling to recover to the highs of January, with concerns over a global trade war also weighing on prices.

"Equities have been the most significant external driver for the short-term price direction of oil, with the significant volatility coming (partly) from the perception of a trade war", said Dominic Chirichella, senior partner at the Energy Management Institute in NY.

U.S. WTI crude futures were last down $1.18 at $62.33 a barrel.

Brent for June settlement added 28 cents to $68.30 a barrel on the London-based ICE Futures Europe exchange.

Futures in NY slipped as much as 2.1 percent to the lowest intraday price since March 20.

The West Texas Intermediate for May delivery fell 0.14 USA dollar to settle at 63.37 dollars a barrel on the New York Mercantile Exchange, while Brent crude for June delivery lost 0.10 dollar to close at 68.02 dollars a barrel on the London ICE Futures Exchange.

China today confirmed a 25 per cent levy on $50bn (£36bn) worth of US goods, including vehicles and agricultural products like soybeans, in response to US President Donald Trump's planned tariffs on on Chinese goods.

OPEC and its allies are collectively curbing 1.8 million barrels per day of crude output to help eliminate a global oil glut.

Crude oil prices lacked clear direction in early Thursday trading as markets balanced between declining US inventories and potential trade war fears.

But BNP's Mr. Tchilinguirian said the oil market may likely "look past" any inventory data until the implications of the U.S. Movements in the equities markets have spilled over recently into commodities.

The extent to which US production increases counterbalances output cuts from the Organization of the Petroleum Exporting Countries will be critical, said Gene McGillian, manager of market research at Tradition Energy in Stamford.

The direction of the crude oil market on Wednesday will be determined by the U.S. Energy Information Administration's inventories report.

The energy minister of OPEC member Qatar told Reuters that the organization and its allies should maintain supply cuts, which are set to run until the end of 2018.


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