Crude oil futures slip after Trump’s threat on more tariffs for China
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Crude oil futures were lower during mid-morning trade in Asia Thursday after US President Donald Trump renewed threats on further tariffs against China, if no progress is made on a trade agreement at the G20 summit. Mild profit-taking after Wednesday’s spike also added downward pressure.
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At 10:20 am Singapore time (0220 GMT), ICE Brent August futures were down 20 cents/b (0.30%) from Wednesday’s settle at $66.29/b, while the front-month NYMEX August light sweet crude futures contract was 17 cents/b (0.29%) lower at $59.21/b.
Trump said his Plan B with China is to impose more tariffs and do less business with China, if no progress is made at the G20 summit over the weekend, according to media reports.
“Risk appetite took a dip just as market watchers took concern over US President Donald Trump’s renewed warning on imposing ‘substantial additional tariffs’ against China, if there is no progress made on a trade deal at the G20 summit in Japan,” UOB said in a note Thursday.
“With risk appetite seen softer at closing yesterday [Wednesday], Asian bourses likely headed for a mixed start for the day ahead,” it added
Market participants also attributed mild profit-taking for the lower crude futures on Thursday morning.
“We saw a pretty strong rally [overnight] after the Energy Information Administration reported a massive 12.79-million-barrel draw last week,” David Lennox, resource analyst at Fat Prophets, said.
“I won’t be surprised to see a slight pull back on that rally,” Lennox added.
On Wednesday, the EIA reported a surge in export activity to a fresh all-time high, which drove US crude inventories to a seven-week low.
According to the EIA, US crude exports jumped 348,000 b/d to a record high of 3.77 million b/d during the week ended June 21. Outflows were 163,000 b/d stronger than the previous record-high 3.61 million b/d reached in mid-February.
The surge in crude exports contributed to a 12.79-million-barrel draw in commercial crude stocks, taking inventories to 469.58 million barrels. While the draw put a considerable dent in a budding crude supply overhang, US crude inventories remain ample at 6.3% above the five-year average.
Market participants will next keep an eye out on the Baker Hughes rig count data, an early indicator of future US crude oil production, set to be published later Friday.
As of 0220 GMT, the US Dollar Index was up 0.09% at 95.815.
–Ng Jing Zhi, firstname.lastname@example.org
–Edited by Geetha Narayanasamy, email@example.com