Oil prices slipped today on concerns that the Phase 1 trade deal between the United States and China, the world’s biggest oil users, may not boost demand as the United States intends to keep tariffs on Chinese goods until a second phase.
U.S. Treasury Secretary Steven Mnuchin announced yesterday that tariffs on Chinese goods will remain the same 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 today.
Brent crude LCOc1 was down 11 cents at $64.38 per barrel by 10:20 GMT. U.S. West Texas Intermediate crude futures CLc1 were down 12 cents at $58.11 a barrel.
Edward Moya, analyst at brokerage OANDA, claimed that “A pickup with global demand for crude may struggle as U.S.-Chinese tensions linger after some hard line stances from the Trump administration.”
“Financial markets are disappointed that the Trump administration … signalled tariffs will remain the same until after the 2020 U.S. Presidential election, depending on whether China comes through on their promises with the Phase 1 agreement.”
U.S. President Donald Trump is due to sign the Phase 1 agreement with Chinese Vice Premier Liu He at the White House on Wednesday. That agreement is expected to include provisions for China to buy up to $50 billion more in U.S. energy supplies.
U.S. crude inventories rose by 1.1 million barrels, data from the American Petroleum Institute showed, countering expectations for a draw.
U.S. oil production is expected to rise to a record of 13.30 million barrels per day in 2020, mainly driven by higher output in the Permian region of Texas and New Mexico, the U.S. Energy Information Administration (EIA) said.
Their statements came after Russian news agency Tass reported that OPEC and its allies – known as OPEC+, started consultations on extending the current output-cutting deal until June without holding a meeting in March.