Oil fell for the first time in three days as US Secretary of State Mike Pompeo fanned the flames of the trade war with China, heightening concerns about economic growth that underpins energy demand.
Futures fell as much as 1.7 percent in New York on Tuesday. Pompeo told CNBC that Huawei Technologies Co. and other Chinese companies pose national security threats to the US Still, Pompeo said he expects talks with China to continue. More than 80 percent of the stocks in the S&P 500 Index declined and US government debt rose as
investors shunned risky assets.
“The weakening global economic backdrop continues to control the narrative across equities and other asset classes and the oil market is certainly not being spared,” said Michael Tran, commodity strategist at RBC Capital Markets.
Crude prices have been whipsawed this month amid conflicting indicators of whether the trade war will move towards resolution. Germany is preparing fiscal stimulus measures to head off the chances of a deep recession
in Europe’s biggest economy, while more Federal Reserve rate cuts are expected to shore up American growth.
Analysts are forecasting that US crude stockpiles last week fell for the first time in three weeks, a positive sign for oil markets. Brent for October settlement declined 72 cents to $59.02 on the ICE Futures Europe Exchange. The global benc-hmark crude traded at a prem- ium of $3.67 a barrel to WTI.
While the White House’s move to delay sanctions on Huawei was seen as encouraging for the prospects of a trade deal between the world’s
two largest economies, the US added more than 40 affiliates of the Chinese company to a trade blacklist.