Oil prices fall as China to impose new tariffs on U.S. goods

Oil prices fall as China to impose new tariffs on U.S. goods

Some experts thought it was remarkable that oil prices on Friday didn't fall further, given that this is the first time the commodity has been dragged into the U.S./China trade war and the possible consequences: "With China being the world's foremost crude import growth region, U.S. producers need China, not the other way around", explained Michael Tran, director of energy strategy at RBC Capital Markets. "That could result in even lower oil demand next year, and an even more oversupplied oil market next year".

Brent for October delivery on Friday dropped US$0.58 to end the session at US$59.34 on the ICE Futures Europe Exchange, up 1.2 percent for the week.

Meanwhile, DNB Markets cut its estimate of the benchmark Brent oil price to 66 dollars for 2019, down from a previous projection of 73 dollars, due to its tepid outlook for global economic growth, which would weigh down global demand.

Crude oil futures shed 1.2% in the week.

U.S. West Texas Intermediate (WTI) crude futures slid by $1.33 to $54.02. "Yet, in truth, the sense of unease stems from ongoing worries about the global economy", said Stephen Brennock of oil broker PVM.

China's commerce ministry said it would impose additional tariffs of 5% or 10% on a total of 5,078 products originating from the United States, including agricultural products such as soybeans, crude oil and small aircraft.

Iran has said it will scale back compliance with the pact unless the Europeans find a solution enabling Tehran to sell its oil despite USA sanctions.

OPEC, Russia and other producers have, since January 1, implemented a deal to cut output by 1.2 million barrels per day.

USA crude exports to Asia so far in August indicate weaker flows around 892,000 bpd, down by 360,000 bpd from last month, according to market intelligence firm Kpler. The energy sector sank over 3.8 percent as of market close, the worst performer of the 11 primary S&P 500 sectors.

Analysts were growing concerned that the latest escalation in the U.S.

Trump also asked US companies to end their China operations in response to Beijing's latest decision to raise tariffs.

"We urge the Administration to quickly come to a trade agreement with China that would lift all tariffs under Section 301, including the damaging retaliatory tariffs on American energy exports".

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