New York: Oil fell again Monday after its first monthly drop since May as a deepening trade war further stoked fears that fading global economic growth will hurt fuel demand.
Futures dropped under $55 (Dh201) a barrel in New York, having lost 5.9 per cent in August. US tariffs on a further $110 billion of Chinese imports took effect on Sunday, and additional Chinese levies on American products — including oil for the first time — also kicked in.
The outlook for Chinese manufacturing deteriorated further in August, the latest evidence that the US-China trade conflict is taking a toll on the global economy. Face-to-face talks between American and Chinese negotiators scheduled for this month are still on, President Donald Trump said Sunday, but investors see very little chance of a near-term breakthrough.
“Economic uncertainty will continue to dominate the oil market’s agenda as new US and China trade measures come into effect,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. “The market is more and more resigned to a protracted stand-off and will be looking toward central bank easing to shore-up risk appetite to help overcome the prevailing hesitancy in going long oil.”
West Texas Intermediate for October delivery fell 27 cents to $54.83 a barrel on the New York Mercantile Exchange as of 10.30am in London after falling as much as 1.1 per cent earlier. The contract lost $3.48 in August.
Brent for November settlement fell 42 cents, or 0.7 per cent, to $58.83 a barrel on the ICE Futures Europe Exchange. The October contract expired on Friday. The global benchmark lost 7.3 per cent last month. It traded at a premium of $4.19 to WTI for the same month.
The US imposed previously announced duties of 15 per cent on a wide range of Chinese consumer goods. Another batch of about $160 billion of China’s products — including laptops and mobile phones — will be hit with 15 per cent levies on December 15.
Hurricane Dorian came ashore in the Bahamas tied as the most powerful storm to hit land anywhere in the Atlantic. Crude’s drop on Friday was driven by the prospect of Dorian reducing gasoline demand in Florida, Georgia and South Carolina, Jeffrey Halley, a senior market analyst at Oanda Corp., said in a note. WTI could quickly recoup those losses if Dorian looks like it will miss the Florida panhandle and the Carolinas, he said.