Oil prices fall on emerging market woes, looming tariff deadline
SINGAPORE (Reuters) – Oil prices fell on Thursday as emerging market woes weighed on sentiment, while a deadline neared for a potential new round of US tariffs on another $200 billion of Chinese goods.
US West Texas Intermediate (WTI) crude futures CLc1 were at $68.47 per barrel at 0031 GMT, down 25 cents, or 0.4 percent, from their last settlement.
International Brent crude futures LCOc1 fell 27 cents, or 0.4 percent, to $77.0 a barrel.
Broad emerging market weakness is weighing on global economic growth prospects.
Meanwhile, a public comment period on possible US tariffs on another $200 billion of Chinese goods ends on Thursday, with expectations that US President Donald Trump will impose the additional levies.
Given that China and emerging markets more broadly are key demand growth areas for oil markets, analysts said crude prices had come under downward pressure.
“The prospects of increased supplies from OPEC and her allies, and weaker demand from China and other emerging markets could weigh further on oil prices going forward, or at least limit the upside potential,” said Fawad Razaqzada, market analyst at futures brokerage Forex.
“In part, this is because of the US-dollar’s strength, weighing heavily on emerging market currencies, including the yuan, which in turn has pushed up the costs of all dollar-denominated commodities,” he added.
For now, however, oil demand remains strong, not least in the United States.
US crude stockpiles fell last week as refineries boosted output amid strong consumption, data from industry group the American Petroleum Institute showed .
Crude inventories fell by 1.17 million barrels to 404.5 million barrels in the week to Aug. 31, while refinery crude runs rose by 198,000 barrels per day, the API data showed.
The producer cartel of the Organization of the Petroleum Exporting Countries (OPEC) said that it expected global oil demand to break through 100 million barrels per day for the first time later this year.
Meanwhile, there are concerns that US sanctions against Iran, which will target the OPEC-member’s oil industry from November, will tighten global supply.