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Oil drops on concerns that U.S.-China trade deal may not stoke demand

By Ritu,

Capital Sands

Oil prices slipped on Wednesday on concerns that the pending Phase 1 trade deal between the United States and China, the world’s biggest oil users, may not boost demand as the U.S. intends to keep tariffs on Chinese goods until a second phase.

U.S. Treasury Secretary Steven Mnuchin said late on Tuesday that tariffs on Chinese goods will remain in place until the completion of a second phase of a U.S.-China trade agreement, even as both sides are expected to sign an interim deal later on Wednesday.

Brent crude  was down 16 cents, or 0.3%, at $64.33 per barrel by 0745 GMT. U.S. West Texas Intermediate crude futures  were down 15 cents, or 0.3%, at $58.08 a barrel.

“Financial markets are disappointed that the Trump administration … signaled tariffs will remain in place until after the 2020 U.S. Presidential election, depending on whether China comes through on their promises with the phase-one agreement.”

U.S. crude inventories rose by 1.1 million barrels, data from the American Petroleum Institute showed, countering expectations for a draw.