Brent loses as US-China trade tensions flare

The front-month ICE Brent contract has declined by $0.41/bbl on the day, to trade at $61.24/bbl at 07.00 GMT.

CONCEPT: Red downward arrow depicting the price decline. Getty Images

Upward pressure:

Brent crude’s price got little support after the American Petroleum Institute (API) reported a drop in US crude stocks.

Commercial US crude oil inventories fell by 1.06 million bbls in the week ending 4 April, according to the API estimates.

A decline in US crude stocks can indicate oil demand growth and lend some support to Brent's price, according to market analysts.

The broadly followed US government data on crude stockpiles from the US Energy Information Administration (EIA) is due later today.

Downward pressure:

Brent crude’s downward spiral can be attributed to the escalating trade tensions between the two largest oil consumers of the world – the US and China.

President Donald Trump-led US administration has hit back at China with a 104% tariff, after Beijing imposed a 34% levy on all US imports last week in retaliation to US tariffs announced on 2 April.

“The [US] administration has reportedly been inundated with calls from countries looking to strike a deal on US tariffs,” ANZ Bank’s senior commodity strategist Daniel Hynes said. “Beijing responded earlier that its [it is] prepared to “fight to the end” via retaliatory trade measures,” Hynes added.

The news has dragged Brent’s price to a four-year low, according to market analysts. “Risk of further escalation in trade tensions between the US and China poses increased downside risks to the commodities complex,” two analysts from ING Bank remarked.

By Aparupa Mazumder

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