Oil price tumbles after Trump comments
Oil tumbled toward $60 a barrel as president Donald Trump threw trade talks between the world’s two largest economies into disarray with a threat to raise tariffs on Chinese imports, roiling global markets.
US crude pared losses after plunging as much as 3.1% in New York to the lowest level in five weeks. China was said to be considering delaying a trip by its top trade negotiators to Washington this week after Trump threatened on Sunday to raise tariffs on $200 billion of Chinese imports to 25% from 10%.
Saudi Arabia also cut June pricing for all crude grades to the US in a step that appeared to be aimed at easing concern over supplies.
Crude has retreated around 10% after reaching a six-month high in late April on signs the global supply outlook may not be as tight as previously feared. Investors have also been losing faith in this year’s rally, with money managers slashing optimistic wagers on U.S. oil prices last week for the first time since February.
The possibility the world’s two largest economies won’t reach a trade deal threatens to remove a crucial support for prices.
“President Trump is always full of surprises,” said Jeffrey Halley, senior market analyst at Oanda Asia Pacific Ltd. in Singapore. “It can only be construed as bearish for oil because if there is a trade war then consumption globally will fall, and oil will fall with that.”
Oil prices could lurch further if the escalating trade war puts pressure on the S&P 500 Index of US shares, said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. “Lower equities means lower oil,” he said.
West Texas Intermediate crude for June delivery fell 93 cents, or 1.5% , to $61.01 a barrel on the New York Mercantile Exchange at 1:34 p.m. in Dubai, after dropping as much as $1.90 earlier. It lost 2.2% last week.
Brent for July settlement declined by 86 cents, or 1.2 %, to $69.99 a barrel on the London-based ICE Futures Europe exchange. It fell to $68.79 earlier, the lowest since April 2. The global benchmark crude was at a premium of $8.90 to WTI for the same month.
Trump threatened not only to more than double tariffs on $200 billion of Chinese exports to the US but also raised the possibility of imposing a 25% tariff on an additional $325 billion of goods. Chinese vice premier Liu was set to arrive in Washington Wednesday with a delegation of about 100 people for what had been shaping up to be possibly the final round of talks.
China’s offshore yuan fell along with Asian stocks and industrial commodities including copper on Monday as investors assessed the potential hit to global economic growth if the trade talks don’t succeed.
Saudi Arabia, the world’s biggest oil exporter, cut the pricing for June supplies of all crude grades to the US, while raising it for other regions. The kingdom’s official selling prices serve as a benchmark for other Middle East suppliers.
The US decision to tighten economic curbs on Iran is currently providing no support for oil prices, Schieldrop said.
“The market is taking no notice of increased sanctions against Iran” or the “harsh” warning that U.S. National Security Adviser John Bolton made against any potential military action by Tehran, he said.
Read: What oil at $100 a barrel would mean for the world economy
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