Oil trades below $63 as investors assess US-China trade battle2 min read . Updated: 09 Apr 2018, 01:55 PM IST
Oil is losing steam after rising more than 5% last month as US President Donald Trump repeatedly raised the stakes against China, rattling markets in recent weeks
Singapore: Oil’s decline slowed after falling to an almost three-week low as investors continued to evaluate the potential impact of an escalating trade conflict between the US and China.
Futures in New York traded below $63 a barrel after dropping 4.4% last week. While US President Donald Trump on Sunday predicted China will be first to buckle as the world’s two largest economies teeter on the brink of a trade war, China’s leader may shed some light on his plans at the Boao Forum for Asia on Tuesday. Money managers, in the meantime, slashed bets on rising West Texas Intermediate crude by the most since August, while short-selling surged.
Oil is losing steam after rising more than 5% last month as Trump repeatedly raised the stakes against China, rattling markets in recent weeks. Along with other risky assets, oil took a blow on concern the escalating tension will threaten growth that drives energy demand amid record US output, hindering efforts of the Organization of Petroleum Exporting Countries (Opec) and its allies to curb a global glut and prop up prices.
“It’s a tough market at the moment. There’s weakness in the next session or two, and a constrained range until we get more global market news," Michael McCarthy, chief market strategist at CMC Markets, said by phone from Sydney. “There’s potential for a breakaway announcement from President Xi Jinping. There will be fairly cautious Asia Pacific trading ahead of that tomorrow."
WTI for May delivery traded 26 cents higher at $62.32 a barrel on the New York Mercantile Exchange at 1.11pm in Singapore. Prices fell 2.3% to $62.06 Friday, the lowest close since 19 March. The contract declined $1.48 to $62.06 on Friday. Total volume traded was about 14% below the 100-day average.
Brent for June settlement was up 28 cents to $67.39 a barrel on the London-based ICE Futures Europe exchange. The contract dropped $1.22, or 1.8%, to $67.11 on Friday. The global benchmark crude traded at a $5.06 premium to June WTI.
Futures for September delivery were unchanged at ¥401.5 a barrel on the Shanghai International Energy Exchange by a midday break at 11.30am local time. The exchange was closed on Thursday and Friday for Chinese holidays.
In the US, President Trump ordered a review of tariffs on another $100 billion of imports from China, bringing the total to $150 billion of Chinese goods under consideration. In response, a senior Chinese official said the nation will “retaliate immediately, intensively, without any hesitation."
Adding bearishness to the market, hedge funds cut their WTI net-long position—the difference between bets on a price increase and wagers on a drop—by 9.4% in the week ended 3 April, according to the US Commodity Futures Trading Commission. Longs fell 7.4% as funds shed the largest number of bullish bets in almost a year, while shorts jumped the most since August. Bloomberg