Oil slid in New York, reversing two gains of days, as concerns over escalating trade tensions between China and the US overshadowed signs of tighter supply. Futures dropped 1.5 percent. American crude inventories as well as those in the key hub of Cushing, Oklahoma, slipped last week, the American Petroleum Institute was said to report.
China’s Ministry of Finance said it will apply 25 percent tariffs on about $16 billion of US goods in two weeks, mirroring an announcement by the US. America also reimposed some sanctions on Iran ahead of measures that will target the OPEC member’s oil trade.
Crude has held within a $3 range in August and a measure of price volatility has subsided to the lowest level since May as the market weighs concerns over both demand and supply.
President Donald Trump has reaffirmed plans to impose tougher penalties on Iran’s oil sales in November while the US-China trade war is posing a threat to growth in energy consumption.
“The very tight trading range hides the fact that all is not well,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen. “Oil looks increasingly sandwiched between the risk to demand in the medium-to-long term from trade wars, and the undetermined risk to supplies in the short-term from Iran sanctions.”
West Texas Intermediate crude for September delivery traded at $68.14 a barrel on the New York Mercantile Exchange, down $1.03 in London. Total volume traded was about 48 percent below the 100-day average.
Brent for October settlement also fell 64 cents to $74.01 a barrel on the London-based ICE Futures Europe exchange, after rising 90 cents. The global benchmark crude traded at a $6.51 premium to WTI for the same month.
US crude inventories fell 6.02 million barrels last week, the API was said to report.
That’s more than double the 3-million-barrel decline predicted in a Bloomberg survey before Energy Information Administration data.
The API also showed supplies stored at Cushing dropped by 576,000 barrels, which would be the twelfth straight week of losses if
confirmed by official data.