Oil Price Faces Brisk Selloff as Trump Talks Up More Trade Tariffs
Crude oil hastened it retreat on Tuesday, adding to mounting losses over the past month as President Trump doubled down on his threat to slap China with more import tariffs. Investors fear that a prolonged trade war would undermine global growth and demand for fuel.
Oil Slides to Two-Month Low
Crude prices fell to their lowest in over two months, adding to a miserable month of October. The U.S. West Texas Intermediate (WTI) benchmark for U.S. crude reached a session low of $65.33 a barrel in New York. It was last seen trading at $66.39, down 65 cents, or 1%, from the previous day. Brent crude, the international futures benchmark, saw lows of $75.09 a barrel on London’s ICE futures exchange. At press time, prices were down $1.41, or 1.8%, at $75.93 a barrel.
The past 30 days are shaping up to be the worst month for crude since mid-2016. Since peaking at $76.41 on Oct. 1, WTI has fallen more than 13%. Brent has faced similar declines, shedding 12% from its latest peak on Oct. 3.
Trump Threatens More Tariffs
U.S. President Donald Trump has high expectations for his upcoming meeting with Chinese counterpart Xi Jinping, but has threatened further tariffs if both sides fail to reach a new trade accord. In recent months, the Trump administration has imposed tariffs on $250 billion of Chinese goods, prompting Beijing to respond with duties on $110 billion worth of U.S. goods.
“And I have $267 billion waiting to go if we can’t make a deal,” Trump said in an interview with FOX News.
Bloomberg News reported Monday that the White House was planning to announce duties on all remaining Chinese imports by early December if talks between Trump and Xi fail to break the impasse. Both leaders are planning to meet next month at the Group of 20 Summit in Buenos Aires, Argentina.
China’s economic growth slowed to just 6.5% annually in the third quarter, the slowest since the financial crisis. A prolonged trade war is expected to place further pressure on Chinese growth as policymakers attempt to steer the economy toward consumption and away from traditional smokestack industries.
Trade tensions are compounding a bearish environment marked by rising inventories and plans for higher output from major producers. Both Russia and Saudi Arabia have expressed plans to raise production to account for the sharp drop in Iranian exports. According to data from Refinitiv Eikon, output from Russia, Saudi Arabia and the United States reached 33 million barrels per day for the first time ever last month. That’s a 10 million-barrel increase since 2010.
U.S. commercial crude inventories have risen sharply over the last four weeks. The U.S. Energy Information Administration (EIA) will announce the latest inventory figures Wednesday morning. An advance estimate courtesy of the American Petroleum Institute (API) is scheduled for later this afternoon.
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