Oil down on trade war demand fear

Spain

LONDON, May 29, 2019 – Oil prices were down on Wednesday in Asia amid fears that the ongoing trade war between the US and China would affect demand for oil.

US Crude Oil WTI Futures were down 1.1% to $58.52 by 12:30 AM ET (04:30 GMT). International Brent Oil Futures declined 0.8% to $68.14.

Amid the lack of other directional drivers, traders today are focusing on the trade tension between the US and China, the world’s biggest oil importers.

“Oil prices lack direction because the oil market currently finds itself caught between supply risks and concerns about demand,” Commerzbank (DE:CBKG) said in a note.

“A whole host of poor economic data from the major economic areas of the US, China and Europe, plus the entrenched situation in the trade talks, are not good news for the demand outlook.”

News on Chinese telecom giant Huawei were in focus after the company filed a lawsuit against the US government and challenged the constitutionality of a US law banning federal agencies from buying its products.

Banning Huawei using cybersecurity as an excuse “will do nothing to make networks more secure. They provide a false sense of security, and distract attention from the real challenges we face,” said Song Liuping, Huawei’s chief legal officer. “Politicians in the US are using the strength of an entire nation to come after a private company,” Song noted. “This is not normal. Almost never seen in history.”

The news came one day after US President Donald Trump said Washington is “not ready for a deal” with China, although he believes an agreement could be reached eventually.

Weekly data on US crude inventories are delayed this week due to Monday’s holiday. The American Petroleum Institute will release its figures late Wednesday, while the Energy Information Administration’s report is due Thursday morning.