Oil dips as trade row deepens

Bloomberg

Brent oil slid below $60 a barrel for a second day as investors weighed the prospects of a prolonged standoff between the US and China, following the Trump administration’s labelling of the Asian nation as a currency manipulator.
London-traded futures erased an earlier rally to fall about 0.5 percent on Tuesday. A move by the People’s Bank of China earlier in the day to strengthen the yuan wasn’t enough to stave off worries about the escalating dispute between the world’s largest oil consumers. A close below $59.65 a barrel would put the global benchmark price in a bear market, down 20 percent from its late-April peak.
“We shouldn’t underestimate the potential impact of a full-blown trade war between the world’s two biggest economies,” said Bart Melek, head of global commodity strategy at TD Securities. “This could very well mean we as a market significantly overestimated demand growth for oil and we could easily be in a surplus situation in 2020.”
Brent crude prices are down about 8 percent this month as global economic worries eclipse the rising threat of supply disruptions in the Middle East. Iran could step up its operations against tankers passing through the Strait of Hormuz, the world’s most important oil chokepoint, Foreign Minister Javad Zarif said.
Brent for October settlement fell 6 cents to $59.75 a barrel on London-based ICE Futures Europe Exchange. West Texas Intermediate for September delivery lost 15 cents to $55.54 a barrel on the New York Mercantile Exchange.
The West Texas Intermediate for October traded at a discount of as much as $5.29 to Brent for that month, a gap that’s narrowed markedly in recent days as trade fears
undercut the outlook for global oil prices.