Oil Prices Slipped as Trade War Escalates Growth Concerns

August 5, 2019 | Monday

Commodities

   

On Monday, oil prices fell as global economic growth concerns rise. And this was after U.S. President Donal Trump threatened to intensify a trade war with China with more tariffs. As a result, this might lead to limiting the fuel demand in the two biggest crude consumers in the world.

Aside from that, Brent crude futures fell 71 cents or 1.15% to $61.18 a barrel. Then, U.S. West Texas Intermediate (WTI) crude futures also dropped 71 cents or 1.28% to $54.95 per barrel. Analyst Stephen Brennock stated, "One man, one tweet, that's all it took for oil prices to suffer their steepest daily decline in several years."

Oil, Gold and Trade War

Then on Monday, Asian equity plummets to its six-month low. At the same time, gold prices rose as investors shifted to safe-haven assets.

Trump said last week that he would slap another 10% tariff on $300 billion worth of Chinese imports, which will begin on Sept. 1. Moreover, the U.S. president will increase the duties further if Chinese President Xi Jinping won't move quickly towards a trade deal. In addition to that, the announcement extends U.S. tariffs to almost all imported Chinese products.

China, on the other hand, vowed on Friday to retaliate against the decision of Trump. And this move will end the month-long trade truce. Meanwhile, China let yuan drop beyond the key 7-per-dollar level for the first time in over a decade. The lower yuan would increase the cost of dollar-denominated oil imports in China. Then, U.S. shipments rose by 260,000 barrels per day (bpd) in June to a monthly record of 3.16 million bpd.

   

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