Oil prices fell further on Wednesday, extending recent heavy losses as deepening US-China trade tensions weighed on the outlook for the global economy and energy demand. Brent crude futures were down $1.04, or 1.75%, at $57.90 a barrel by 1251 GMT, setting a fresh seven-month low. Prices have lost more than 20% since hitting their 2019 peak in April. US West Texas Intermediate (WTI) crude futures were down $1.17, or 2.18%, at $52.46.
Brent has plunged more than 10% over the past week after US President Donald Trump said he would slap a 10% tariff on a further $300 billion in Chinese imports from September 1, sending global equity markets into a tailspin. The market continues to grow more uncertain about the demand outlook given the deterioration of trade talks between China and the US, ING analysts said in a note.
The bank lowered its 2019 price outlook, mostly because of demand concerns, forecasting that global oil supplies will exceed consumption in the first half of next year. Brent crude held losses on Wednesday after falling into bear market as US-China trade concerns dent the outlook for global demand.
Oil in London was little changed on after closing Tuesday more than 20 per cent lower than its late-April peak, meeting the common definition of a bear market. While China said the recent yuan depreciation was decided by the market, not Beijing, the US has labeled the nation a currency manipulator, fueling concerns the trade conflict may escalate. American crude inventories tightened further, falling 3.4 million barrels last week, according industry data.
Brent oil is down almost 10 per cent so far this month as the US-China trade war clouds the outlook for global economic growth, eclipsing concerns crude flows from the Middle East may be disrupted. As trade tensions ratchet up between the world’s two biggest economies, speculation is emerging China may start avoiding American crude imports in anticipation that Beijing will impose tariffs, a move that could further weigh on oil prices.
“There is no doubt the US-China conflict will be extended for a long period of time even though it’s not clear what will happen next,” said Miyoko Nakashima, a senior strategist at Mizuho Securities Co. in Tokyo. Oil prices will stay weak this year, with US West Texas Intermediate seen falling as low as US$45 a barrel, given the prospect of a prolonged battle and signs of weaker supply versus demand dynamics, she added.
Brent for October settlement added 10 cents, or 0.2 per cent, to US$59.04 a barrel on the London-based ICE Futures Europe Exchange as of 8:56am Singapore time after falling 0.6 per cent earlier. The contract declined 1.5 per cent on Tuesday. The global benchmark traded at a premium of US$5.43 to WTI for the same month. WTI oil for September delivery rose 4 cents to US$53.67 a barrel on the New York Mercantile Exchange. The contract decreased 1.9 per cent to US$53.63 on Tuesday.