Oil futures dived Friday morning after China announced it would impose retaliatory tariffs on $75 billion worth of imports from the U.S., including a levy on crude, amplifying concerns about the global economy and demand prospects for crude.
West Texas Intermediate crude for October delivery CLV19, -2.48% on the New York Mercantile Exchange — the U.S. benchmark — fell $1.64, or 3%, to trade at $53.71 a barrel, suffering the worst of the selloff after reports said China’s tariff list includes a 5% levy on imports of U.S. oil.
October Brent crude BRNV19, -1.54%, the global benchmark, shed $1.43, or 2.4%, to $58.48 a barrel on ICE Futures Europe.
“Prices are quickly reflecting the deteriorating relations between the U.S. and China and the impact that could continue to have on the global economy,” said Matt Smith, director of commodity research at Clipper Data, in an interview. “It’s already stretched on for a number of months now and is having a detrimental impact — and this means it’s only going to continue.”
The move also comes with U.S. crude exports to China this month running at their highest level in a year at just shy of 300,000 barrels a day, with a number of vessels carrying U.S. crude set to arrive in China, he said.
China’s official Xinhua News Agency said tariffs of 10% and 5% would take effect on two batches of goods worth $75 billion on Sept. 1 and Dec. 15.
News reports said the tariffs include an extra 5% levy on crude-oil imports beginning next month.
Trump earlier this month announced plans to raise tariffs on an additional $300 billion of Chinese imports on Sept. 1 but postponed a portion of that until Dec. 15.
Oil had been treading water ahead of the tariff announcement, with traders awaiting remarks by Federal Reserve Chairman Jerome Powell at a monetary policy symposium in Jackson Hole, Wyoming. Powell is widely expected to signal the Fed is likely to deliver another rate cut when policy makers meet next month.
Read: Investors might be disappointed in Fed’s message from Jackson Hole
In other energy trading, September gasoline RBU19, -1.64% fell 1.7% to $1.64 a gallon, while October heating oil HOV19, -1.57% lost 1.7% to $1.816 a gallon.
September natural-gas futures NGU19, -1.11% shed 3 cents, or 1.4%, to $2.133 per million British thermal units.
Add Comment