Oil was down on Tuesday morning in Asia, giving up its earlier gains from the session.
fell 0.46% to $42.88 by 10:17 PM ET (3:17 AM GMT) and slid 0.61% to $40.48.
Investors were spooked after White House trade adviser Peter Navarro told the press on Monday that the U.S.’s trade deal with China is “over”, crushing hopes of salvaging the hard-won phase one trade deal reached earlier this year.
China, one of the world’s biggest oil importers, has yet to respond to Navarro’s comments, but an escalation of U.S.-China tension threatens a delay in the global economic recovery from COVID-19, in turn increasing the risks of an oversupply.
The statement put a damper on the optimism seen in the previous session, where Brent futures gained 2.1% and WTI futures rose almost 2%. Some U.S. states emerged from extended lockdown, with New York clogged with traffic as the city emerged from over three months of lockdown.
Investors are now awaiting the predictions in crude oil supply from the American Petroleum Institute (API) and the U.S. Energy Information Administration , due later in the day and on Wednesday respectively.