Oil price hit by trade war fears

WTI Crude Oil

Oil prices were broadly steady on Thursday as an easing of trade tensions between the United States and China and a surprise draw in US crude inventories last week supported the market.

"There is speculation that the Saudis are going to lower prices for their Asian customers", said Bob Yawger, director of energy futures at Mizuho in NY.

"But increasing trade friction between China and the USA is likely to rock global markets and tarnish bullish sentiment in crude oil markets".

"The two countries are using discretion in their actions, and it does not look like the situation is developing into a full-scale trade war yet", said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.

Oil fell after China said it would levy tariffs on $50 billion of US imports in retaliation against measures by President Donald Trump, fanning concerns that economic growth and fuel demand could be hurt.

Rising U.S. oil output is being overshadowed by geopolitical concerns, however, particularly the uncertainty over the U.S. position on whether to continue to waive sanctions against Iran, due for review in May. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 14 cents to settle at $63.37 a barrel, off 0.22 percent. Total volume traded was 12 above the 100-day average.

June Brent crude oil finished the session at $68.12, up $0.48 or +0.71%.

At the time of writing, WTI traded at US$62.38 a barrel and Brent crude was at US$67.11.

In the United States, crude stockpiles unexpectedly fell 3.28 million barrels last week, the American Petroleum Institute was said to report. The EIA data also showed that American oil production rose to an unprecedented level of 10.5 million barrels a day last week, topping 10 million barrels a day for a ninth week.

U.S. President Donald Trump threatened to impose new tariffs on China, prompting investor worry of a trade war between the two biggest countries in the world. China's Ministry of Commerce said it would levy 25 percent tariffs on imports of 106 US products including automobiles and aircraft. The Asian nation said on Wednesday it would levy an additional 25-percent tariff on about $50 billion of United States imports, following which the White House National Economic Council Director Larry Kudlow spent much of the day trying to calm markets. China's ambassador to the U.S., Cui Tiankai, also said his first choice would be to consult the U.S. over trade.

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