Oil holds loss as trade war fears spread in oversupplied market

Oil held losses below $64 a barrel as the risk of a trade war between China and the US rattles a market that’s already grappling with swelling inventories.
Futures were little changed in New York after losing 3 percent on Monday. China imposed retaliatory tariffs on U.S. goods valued at about $3 billion, the latest move in an escalating trade dispute between the world’s largest economies that’s spurring investors to shy away from risk assets. Meanwhile, American crude stockpiles are forecast to have risen for the fifth time in six weeks.
While oil rebounded over 5 percent last month on rising geopolitical risk surrounding the U.S. and OPEC producer Iran, a rapid increase in American production — which has topped 10 million barrels a day for eight straight weeks — has placed a lid on prices. Investors also worry President Donald Trump’s protectionist policy will lead to further reciprocal tariffs by China, undermining global economic growth.
“The escalating dispute between the U.S. and China over trade is driving oil prices down at the moment and it’s probably an issue that’s hard to resolve in the short term,” Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone. “Along with the ongoing trade war, we have rising U.S. crude stockpiles and production, which will always put downward pressure on prices.”
West Texas Intermediate for May delivery was at $63.19 a barrel on the New York Mercantile Exchange, up 18 cents, at 7:58 a.m. in London. The contract fell $1.93 to $63.01 on Monday, the most since Feb. 9. Total volume traded was about 39 percent below the 100-day average.
Brent for June settlement added 29 cents to $67.93 on the London-based ICE Futures Europe exchange. Prices dropped 2.5 percent, or $1.70, to $67.64 on Monday. The global benchmark crude traded at a $4.71 premium to June WTI.
Yuan-denominated oil futures on the Shanghai International Energy Exchange lost 3.3 percent to 402.8 yuan a barrel. The September delivery contract closed 0.9 percent lower on Monday after debuting last week.
The U.S. didn’t respond to China’s March 26 request for consultation on Washington’s steel and aluminum tariffs, the Asian country’s Commerce Ministry said in a statement Monday, adding that officials have widespread public support for tougher measures and repeating Beijing’s stance that disputes should be resolved with dialogue.
In America, crude inventories are estimated to have added 2 million barrels last week, according to a Bloomberg survey before Energy Information Administration data due Wednesday. The nation’s oil production had also increased for a fifth week in the period ended March 23, hitting a fresh record. — Bloomberg