Oil Sinks as China Retaliation in Trade War Spurs Demand Fears
August 23, 2019 EnergyNow Media
By Grant Smith
(Bloomberg) Oil tumbled in New York, erasing this week’s gain, as China’s retaliation against U.S. tariffs spurred fears the trade war will deal an even bigger blow to demand.Futures fell 3.1%, turning what had been a weekly gain into a loss of 2.3%. China will impose additional levies on $75 billion of U.S. goods, with tariffs of 5% on imports of American crude, in response to President Donald Trump’s latest moves. That overshadowed earlier hopes that Fed Chairman Jerome Powell may signal plans for monetary easing in a speech later Friday in Jackson Hole, Wyoming.
“Escalating trade tension increases the risk of the world moving into recession,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “That could result in even lower oil demand next year, and an even more oversupplied oil market next year.”
West Texas Intermediate crude for October delivery lost $1.74 to $53.61 a barrel on the New York Mercantile Exchange as of 8:33 a.m. local time. Brent for October slipped $1.34 to $58.58 on the ICE Futures Europe Exchange, widening its premium WTI to $4.92 a barrel.
Oil had been recovering as fears receded that the dispute between Washington and Beijing would escalate into a currency war. Yet the rebound remained fragile, and U.S. government data on Wednesday showing increases in fuel stockpiles only added to concerns that the market is on the verge of tipping into surplus once again.
Other oil-market news
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A looming U.S. sanctions deadline is threatening to slash Venezuela’s dwindling fleet of rigs in half, further hampering production in the beleaguered OPEC member.
Maersk Drilling, which was spun off as a separate company only months ago, has come to vie for the position of the world’s most valuable offshore-rig company even as its stock tumbled.
Billionaire John Fredriksen is betting big again on the market that created his fortune. Frontline Ltd., controlled by the Norwegian-born tycoon, on Friday said it agreed to buy 10 Suezmax tankers built in 2019 from Trafigura Pte Ltd. for as much as $675 million in cash and shares.
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