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Crude oil dips as China plans tariffs to counter Trump
[NEW YORK] Crude fell as intensifying tariff threats between the US and China raised demand concerns.
Futures slipped 0.7 per cent on Friday and closed down for a fifth straight week, the longest stretch of weekly losses since September. An escalating trade war between Beijing and Washington has investors worried about a slowdown in economic activity and oil consumption.
China plans to levy tariffs on about US$60 billion of US goods, which would go into effect as soon as the US enacts its own measures. Crude oil wasn't included in the list of products potentially affected.
"Commodities take the trade wars the hardest," said John Kilduff, a partner at New York-based hedge fund Again Capital. "As this trade war escalates, WTI could really be hit as a result."
After last month's decline, crude is off to a rocky start in August amid a trade spat between the US and China. Duties ranging from 5 per cent to 25 per cent will be levied on 5,207 kinds of American imports if the US delivers its proposed taxes on another US$200 billion of Chinese goods, China's Ministry of Finance said in a statement on its website late Friday.
The country's largest refiner, Sinopec, will hold off buying US crude as tariff threats raise the prospect of more expensive American imports, according to a person familiar with the matter.
West Texas Intermediate crude for September delivery slid 47 US cents to settle at US$68.49 a barrel on the New York Mercantile Exchange. Prices fell 0.3 per cent this week. Total volume traded Friday was about 44 per cent below the 100-day average.
Brent for October settlement declined 24 US cents to end the session at US$73.21 a barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a US$5.86 premium to WTI for the same month.
Meanwhile, focus also remains on US President Donald Trump's sanctions on Iranian crude and how that might affect the market moving forward. The US has been unable to persuade China to cut Iranian oil imports, according to two officials familiar with the negotiations.
"The biggest overhang is actually what's going on between China and Iran and the idea that we're struggling to get people to join the sanctions camp on Iranian crude," said Rob Haworth, who helps oversee US$151 billion at US Bank Wealth Management in Seattle. "That's leaving some room for Iranian production to stay a little higher than people may have anticipated."