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Oil declines amid market focus on US-China trade feud

Oil declines amid market focus on US-China trade feud

Mubasher: Oil prices declined on Wednesday amidst the looming threat of the damage to the global economy and fuel consumption resulting the heightened tensions between the US and China, according to Reuters.

By 7:45 am GMT, US Nymex crude futures went down by 0.15% to $53.55 per barrel (pb), while international benchmark Brent futures rose by 0.32% to $58.75 pb.

“Crude oil prices remained under pressure as investors grappled with the impact of the trade conflict,” a note by Australia and New Zealand (ANZ) bank was quoted by Reuters.

The protracted trade conflict between the US and China, the world’s top two oil consumers, grew tense as President Donald Trump levied a 10% tariff on an additional $300 billion worth of Chinese goods as from 1 September.

In response, Beijing vowed to fight back against President Trump's abrupt decision.

In addition, market participants caught their breath from a week-long sell-off, with measures carried out by Chinese authorities to curb a slide in the yuan (CNY), mollifying worries of the trade and currency war between Washington and Beijing.

However, “there are concerns that an event could occur at any moment [...] the risk might be shifting to the upside in the near term for oil contracts,” CMC Markets strategist McCarthy was quoted by the news agency.

Meanwhile, Saudi Energy Minister Khalid Al-Falih and US Energy Secretary Rick Perry held a meeting on Tuesday in Washington, in which they voiced concern regarding the threats to the freedom of maritime navigation in the Gulf.

Worries over crude supply passing through the Strait of Hormuz, a major conduit for energy shipments, were stoked as tensions in the Middle East escalated following attacks on oil carriers and US drones.

In the same vein, industry figures pointed to a bigger-than-expected drawdown in US crude stockpiles.

The American Petroleum Institute (API) said that US oil inventories dropped by 3.4 million barrels in the week to 2 August to 439.6 million barrels, versus of a decline of 2.8 million barrels projected by Reuters analysts.

Official data from the Energy Information Administration (EIA) are due to be released later in the day.