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Oil prices weakened on Monday after new tariffs imposed by the United States and China came into force, raising concerns about a further hit to global growth and demand for crude.
Brent crude slipped 55 cents to $58.70 a barrel by 1338 GMT, while US benchmark WTI crude was down 38 cents at $54.72 a barrel. Activity was thin due to the US Labour Day public holiday.
The United States began imposing 15 per cent tariffs on a variety of Chinese goods on Sunday – including footwear, smart watches and flat-panel televisions – as China put new duties on US crude, the latest escalation in a bruising trade war.
US President Donald Trump said the two sides would still meet for talks this month. Trump, writing on Twitter, said his goal was to reduce US reliance on China and again urged American companies to find alternative suppliers outside China.
‘Even as president Trump has indicated that scheduled talks between the US and China are still to proceed, the market is more and more resigned to a protracted stand-off between the two countries and will be looking towards central bank easing to shore up risk appetite,’ BNP Paribas’ Harry Tchilinguirian said.
Beijing’s levy of 5 per cent on US crude marks the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago.
Elsewhere, oil output in August from members of the Organisation of the Petroleum Exporting Countries rose for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by top exporter Saudi Arabia and losses caused by US sanctions on Iran.
In the United States, energy companies cut drilling rigs for a ninth month in a row to the lowest level since January last year.
(NA)
