Oil slipped on Wednesday for a second day on worries that fuel demand could fall after U.S. President Donald Trump doused recent optimism over China-U.S. trade talks and reignited concerns about global economic growth.
Brent crude futures fell 47 cents to $62.63 a barrel by 0442 GMT, while U.S. West Texas Intermediate crude dropped to $56.94, down 35 cents.
Both benchmarks have fallen to their lowest level since before the attack on Saudi Arabian oil facilities on September 14.
“What really pulled the rug from underneath oil was Donald Trump’s comments on trade last night … He’s still maintaining quite a belligerent position,” said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA.
Trump criticized China’s trade practices at the United National General Assembly on Tuesday and said he would not accept a “bad deal” in U.S.-China trade negotiations.
China is the world’s largest oil importer and second-largest crude user. The United States is the largest consumer of oil.
Trump also said he saw a path to peace with Iran even as he denounced Iran for “bloodlust”, cooling other risk premiums built into oil prices.
Oil rallied last week following a crippling attack on Saudi Arabia’s oil installations that has disrupted supplies from the world’s top exporter. To meet its supply obligations to Saudi refineries overseas, Saudi Aramco is buying oil from other Middle East producers.
“Right now, the market is very concerned about the demand side of the equation, but I would caution against being complacent about what’s happening in the Middle East,” said Howie Lee, an OCBC economist.
Saudi’s crude oil stockpiles could run out within two months, and that could prompt buyers to look for supplies in the spot market and push prices higher again, Lee said.
Prices were also weighed down by an unexpected build in U.S. crude inventories last week.
U.S. crude inventories rose 1.4 million barrels last week, the American Petroleum Institute said on Tuesday, compared with analysts’ forecasts of a 200,000-barrel draw down.
Official government data from the U.S. Energy Information Administration will be released later today.
Source: Reuters
