OIL prices settled more than US$2 per barrel lower on Thursday, wiping out the last session’s rally, as investors reassessed a planned pause in sweeping US tariffs and focus shifted to a deepening trade war between Washington and Beijing.
US West Texas Intermediate crude futures fell US$2.28, or 3.7 per cent, to settle at US$60.07 per barrel. Brent crude futures fell US$2.15, or 3.3 per cent, to US$63.33 a barrel.
Both contracts had gained more than US$2 a barrel on Wednesday after US President Donald Trump paused the heavy tariffs he had announced against dozens of US trading partners a week ago, marking an abrupt U-turn less than 24 hours after the levies took effect.
At the same time, however, Trump also raised tariffs against China. US tariffs on Chinese imports now total 145 per cent, the White House told media on Thursday.
China announced an additional import levy on US goods, imposing an 84 per cent tariff.
Higher tariffs against China are likely to prompt lower US crude imports by Beijing, backing up supply and raising US storage levels, trading advisory firm Ritterbusch and Associates told clients on Thursday.
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US crude oil exports to China fell to 112,000 barrels per day (bpd) in March, nearly half of last year’s 190,000 bpd, data from vessel tracker Kpler showed.
“If these trade disputes continue much longer, it’s likely global economics will suffer significant economic damage,” said Henry Hoffman, co-portfolio manager of the Catalyst Energy Infrastructure Fund.
US crude stockpiles rose by 2.6 million barrels last week, government data showed on Wednesday, almost double the increase of 1.4 million barrels analysts projected in a Reuters poll.
Macquarie analysts said on Thursday that they expect another build this week.
The United States is also moving ahead with a 10 per cent levy on all of its imports.
The US Energy Information Administration on Thursday lowered its global economic growth forecasts and warned that tariffs could weigh heavily on oil prices, as it slashed its US and global oil demand forecasts for this year and next.
“The tariff-driven expectation of reduced demand amid the continued possibility of a US recession will remain front and centre of trader concerns in likely keeping a lid on near-term price gains,” Ritterbusch and Associates said. REUTERS
