Oil prices drop due to trade war, demand concerns rake in market anxiety
SINGAPORE-Oil prices underperformed on Tuesday for two consecutive sessions as global demand outlook pressed against OPEC’s arrangement with producers aimed at increasing crude output cuts in 2020.
At 0204 GMT, brent futures dropped 11 cents, equivalent to 0.2% loss at $64.14 per barrel while West Texas Intermediate oil futures dropped 7 cents, or 0.1% to $58.95 per barrel. Both shed 0.2 and 0.3% loss on Monday.
“The euphoria (on output cuts) was short lived, with an unexpected fall in exports from China highlighting the impact of the trade conflict,” said ANZ Bank on Tuesday.
Disclosed data last Sunday stated that Chinese exports in November sunk down with 1.1%, disappointing investors’ 1% rise expectation.
Such inactivity followed after Sino-U.S. trade concerns resurfaced inflicting market pressure and preventing global economic growth to thrive. In line with this, Washington’s scheme of imposing another round of tariffs to $156 billion worth of Chinese goods in Dec. 15 also dragged markets down.
U.S. president Donald Trump utilized tariff implementation to prompt China in making “movement” to avoid them, according to U.S. Agriculture Secretary Sonny Perdue on Monday.
“With the swathe of new tariffs due to kick in on December 15th, the market is watching negotiations closely,” said ANZ.
Organization of the Petroleum Exporting Countries’ plan of increasing output cuts from 1.2 million barrels per day to 1.7 million would still play a huge factor in mid-term even though overshadowed, according to financial analysts,
“While risks remain into year-end on U.S.-China trade talks, the OPEC decision removes a fundamental uncertainty,” said Stephen Innes, market strategist at AxiTrader.
“So, prices aren’t about to fall off a cliff anytime soon if OPEC has a say in the matter,” he added.