Oil Nears Two-Month Low on Deepening U.S.-China Trade Crisis

oil tanker
Photo: By G-Valeriy / Shutterstock

By Sheela Tobben and Jacquelyn Melinek (Bloomberg) –Oil declined near a two-month low on fading prospects for a resolution to the protracted U.S.-China trade dispute.

Futures fell as much as 1.8% in New York on Tuesday. In the latest salvo of the long-running trade war between the world’s largest economies, U.S. officials are discussing restricting capital flows into China. Meanwhile, Beijing left the door open for retaliatory measures for after Washington blacklisted Chinese tech giants.

Trade friction has undermined oil prices because of its deleterious impact on global demand for fuels, chemicals and plastics made from crude. Even crippling attacks on key Saudi Arabian oil installations last month weren’t sufficient to elevate oil prices for a sustained period.

“Demand related fears continue to be hindering oil prices,” said Pavel Molchanov, an analyst at Raymond James & Associates Inc.

West Texas Intermediate for November delivery fell 50 cents to $52.25 a barrel at 12:07 p.m. on the New York Mercantile Exchange.

Brent for December settlement declined 49 cents to $57.86 on the ICE Futures Europe Exchange. The global benchmark crude traded at a $5.67 premium to WTI for the same month.

Prices may come under additional pressure if closely watched U.S. inventory reports later Tuesday and Wednesday show increases in stored supplies, said Tamar Essner, director for energy and utilities at Nasdaq Corporate Solutions.

Inventories probably expanded by 1.7 million barrels last week, according to the median estimate in a Bloomberg survey.

© 2019 Bloomberg L.P