Oil Declines for a Fourth Day After Escalation in Trade War

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Oil fell for a fourth day, the longest run of declines in more than five weeks, as an escalation in the U.S.-China trade war worsened an already shaky global demand outlook.

Futures in New York fell 1.8% after closing down 2.1% on Friday as Beijing said it would put retaliatory tariffs on another $75 billion of U.S. goods including — for the first time — oil. President Donald Trump then announced tariff increases on Chinese goods after crude markets had closed, and also called for American companies to pull out of Asia’s largest economy.

The sharp deterioration in trade relations between the two countries wrong-footed oil investors. Short-sellers slashed wagers by 25% in the week through Aug. 20 that West Texas Intermediate oil would decline, according to data released Friday.

Drivers
  • The Iranian oil tanker that the U.S. sought to seize in Gibraltar was about halfway into the Mediterranean Sea without declaring a destination on Sunday amid mounting speculation over where the roughly 2 million-barrel cargo of crude on board will end up.
  • A looming U.S. sanctions deadline is threatening to clobber Venezuela’s dwindling oil-rig fleet and hamper energy production in the nation with the world’s largest crude reserves.
Prices
  • WTI crude for October delivery fell 97 cents to $53.20 a barrel on the New York Mercantile Exchange as of 8:22 a.m. in Sydney
    • The contract fell for a third day on Friday and was down 1.3% for the week
  • Brent for October delivery was down 99 cents at $58.35 a barrel, after finishing 1% lower at $59.34 on Friday   

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