An intensifying Sino-US trade war has pulled down oil prices, countering the bullish impact of a fall in US commercial crude inventories.
Brent crude futures, the international benchmark for oil prices, decreased 30 cents per barrel to trade at $74.48, while US light crude dropped ten cents to stand at $67.76, Reuters noted.
The ongoing trade tensions between Washington and Beijing escalated on 23 August as the countries imposed 25% tariffs on $16bn worth of each other’s goods.
The US administration is considering the imposition of duties on an additional $200bn worth of Chinese imports, with hearings on the proposed list lined up for this week.
China is expected to retaliate any further action by the US, according to the news agency.
Moody’s Investor Service was quoted by Reuters as saying: “These overall measures are expected to shave up to 0.3-0.5 percentage points from China’s real GDP growth in 2019.
“For the US, trade restrictions will trim off about one quarter of a percentage point from real GDP growth to 2.3% in 2019.”
Analysts are worried about the impact of the trade dispute on global economic growth, and as a result on the demand outlook for oil.
For the week ending 17 August, the US commercial crude oil stockpiles declined by 5.8 million barrels to 408.36 million barrels, according to the weekly data released by the Energy Information Administration (EIA).
Societe Generale oil analyst Michael Wittner said: “This week’s report was bullish for crude. Crude stocks drew due to sharply lower crude imports and near-record refinery crude runs.”
The weekly report also indicated that the US oil output soared to 11 million barrels per day.