Oil prices edged lower on Thursday as fresh tensions between the United States and China over ongoing protests in Hong Kong fueled concern that a long hoped-for deal to end a trade war between the world’s top two economies may be further delayed.
Trade experts have warned the first phase of a deal could slide into next year, while markets are wary negotiations might take a hit as the U.S. House of Representatives passed two bills to back protesters in Hong Kong, much to the disapproval of China.
Brent crude futures LCOc1 dipped 22 cents or 0.35 per cent to 62.18 dollars a barrel by 0611 GMT, while West Texas Intermediate (WTI) crude futures CLc1 fell 20 cents or 0.35 per cent to 56.81 dollars per barrel.
Both benchmarks had risen strongly on Wednesday on bullish U.S. crude inventory data.
“Overnight, we saw a rebound of about three per cent in crude futures after a reduction in U.S. inventories,”
“The volatility today can be attributed to concerns surrounding the ‘phase one’ of the U.S.-China trade deal being delayed into 2020,” said Hue Frame, portfolio manager at Frame Funds in Sydney.
The trade war has hit global growth prospects and dominated the outlook for future oil demand, and U.S. President Donald Trump has said he is inclined to raise tariffs on Chinese imports if a trade deal is not reached.