Oil drops on concerns that U.S.-China trade deal may not stoke demand

Oil market falls too big to offset with output cuts, IEA warns

By Ritu,

Capital Sands

Oil prices slipped on Wednesday on concerns that the pending Phase 1 trade deal between the United States and China, the world’s biggest oil users, may not boost demand as the U.S. intends to keep tariffs on Chinese goods until a second phase.

U.S. Treasury Secretary Steven Mnuchin said late on Tuesday that tariffs on Chinese goods will remain in place 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 later on Wednesday.

Brent crude  was down 16 cents, or 0.3%, at $64.33 per barrel by 0745 GMT. U.S. West Texas Intermediate crude futures  were down 15 cents, or 0.3%, at $58.08 a barrel.

“Financial markets are disappointed that the Trump administration … signaled tariffs will remain in place until after the 2020 U.S. Presidential election, depending on whether China comes through on their promises with the phase-one agreement.”

U.S. crude inventories rose by 1.1 million barrels, data from the American Petroleum Institute showed, countering expectations for a draw.

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