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Oil declines as US-Sino trade tensions raise demand worries

Oil declines as US-Sino trade tensions raise demand worries

Mubasher: Oil prices fell on Wednesday as tensions mounted between the US and China ahead of this week’s trade negotiations, triggering uncertainties for global economic growth and fuel demand, according to Reuters.

By 7:53 am GMT, US Nymex crude futures inched down by 0.08% to $52.59 per barrel (pb), while global benchmark Brent futures ticked down by 0.02% to $58.23 pb.

US and Chinese officials are due to engage in trade talks in Washington on Thursday and Friday, in the latest effort to clinch a deal aiming to put a protracted dispute that roiled financial markets and took a heavy toll on global growth.

However, tensions escalated between the world’s two leading economies after Washington imposed visa restrictions on Chinese officials over the mass detention of ethnic minorities as well as remarks by a US National Basketball Association (NBA) official in support of Hong Kong protests.

This put markets on a risk-aversion mode, according to Singapore-based OCBC bank economist Howie Lee.

“The market is just over-bearish at the moment, too focused on the demand side of the equation,” Lee was quoted by Reuters.

Meanwhile, worries over supply persisted, but they were eclipsed by the gloomy global growth outlook.

Ecuador is set to lose a third of its crude supply due to anti-government protests against austerity which impacted oil exports.

Ecuadorean state-owned company Petroamazonas projected that 188,000 barrels per day (bpd) or over a third of its crude production.

An uprising in Iraq entered a second week, threatening output at the second biggest producer at the Organization of the Petroleum Exporting Countries (OPEC).

In the US, oil inventories rose by 4.1 million barrels last week to 422 million, industry-funded group the American Petroleum Institute (API) said on late Tuesday.

This came well above expectations of a 1.4 million barrel buildup, according to Reuters survey.

The Energy Information Administration (EIA) is scheduled to release its weekly report later in the day.

The EIA said on Tuesday that US production will rise by 1.27 million bpd this year to a record 12.26 million bpd, while output is set to climb by 910,000 bpd to 13.17 million bpd next year.