China imposed retaliatory tariffs on US goods valued at about $3billion (R35.37bn), the latest move in a trade dispute between the world’s largest economies that is spurring investors to shy away from riskier assets.
Meanwhile, US crude stockpiles are forecast to have risen for the fifth time in six weeks.
Oil rebounded over 5percent last month on the increasing risk that the US could quit the nuclear deal with Opec producer Iran. Yet investors worry that President Donald Trump’s other great geopolitical risk - protectionist trade policies that could lead to further reciprocal tariffs by China - will undermine global economic growth. The rapid increase in US crude production - which has topped 10million barrels a day for eight straight weeks - has also placed a lid on prices.
“Financial markets have gone through a risk-off period, meaning that risky assets are sold,” said Michael Poulsen, an analyst at Global Risk Management. “Looking at the oil fundamentals, US production is still on the rise.”
West Texas Intermediate (WTI) for May delivery was at $63.45 a barrel on the New York Mercantile Exchange, up 44cents, at 9.25am in London. The contract fell $1.93 to $63.01 on Monday, the most since February 9.
Total volume traded was about 32percent below the 100-day average. Brent for June settlement added 53c to $68.17 on the London-based ICE Futures Europe exchange.
Prices dropped 2.5percent, or $1.70, to $67.64 on Monday. The global benchmark crude traded at a $4.73 premium to June WTI.
The September delivery contract closed 0.9percent lower on Monday after debuting last week. US crude inventories are estimated to have added 2million barrels last week, according to a survey before Energy Information Administration data due today.
The nation’s oil production had also increased for a fifth week in the period ended March 23, hitting a fresh record.