| 10.1°C Dublin

Oil prices slump 1.3pc as trade war jitters continue

Close

Tension:  US president Donald Trump is locked in a trade battle with China. Photo: AP

Tension: US president Donald Trump is locked in a trade battle with China. Photo: AP

AP

Tension: US president Donald Trump is locked in a trade battle with China. Photo: AP

Oil prices slipped yesterday as China's economic outlook remained weak even as manufacturing data improved, with the continuing trade war with the United States weighing on demand growth for the world's largest crude importer.

Brent crude futures were down 80 cents, or 1.3pc, at $61.11 (€56) a barrel by afternoon. West Texas Intermediate (WTI) crude futures fell 46 cents, or 0.8pc, to $55.45.

China's official purchasing managers' index rose to 49.8 in September, slightly better than expected, and advancing from 49.5 in August.

However, it remained below the 50-point mark that separates expansion from contraction on a monthly basis, data from the National Bureau of Statistics showed.

The nation has warned of instability in international markets from any "decoupling" of China and the US, after sources said president Donald Trump's administration was considering delisting Chinese companies from American stock exchanges.

Meanwhile, top oil exporter Saudi Arabia has restored capacity to 11.3 million barrels per day after an attack on its processing facilities this month, sources told Reuters last week, although Saudi Aramco has yet to confirm its operations have been restored.

While Saudi Arabia is maintaining exports by using crude from inventories and spare production capacity, it remains unclear how much of its output has actually been restored.

Saudi Arabia's crown prince Mohammed bin Salman, often referred to as MBS, warned on Sunday that oil prices could spike to "unimaginably high numbers" if the world does not come together to deter Iran, but said he would prefer a political solution.

"The remarks by MBS help to alleviate immediate concerns around escalations in the Middle East, leaving the market to revert its focus to the economy," BNP Paribas global oil strategist Harry Tchilinguirian told the Reuters Global Oil Forum.

"Clearly, speculators have taken comfort from Saudi comments and the speed at which they plan to bring supply back to the market," ING also said in a note.

"However, we still believe that the market is underpricing the geopolitical risk in the region."

Oil prices are likely to remain steady this year, a Reuters survey indicated yesterday, with supply shocks such as the attack on Saudi Arabia countering flagging demand.

Analysts forecast that Brent would average $65.19 a barrel in 2019 and WTI $57.96.

Reuters

Irish Independent