HOUSTON (Reuters) - Oil prices weakened on Monday after new import tariffs imposed by the United States and China came into force, raising concerns about a further hit to global economic growth and demand for crude.
International Brent crude futures LCOc1 settled down 59 cents to $58.66 a barrel, after trading as low as $58.10 during the day. U.S. benchmark WTI crude CLc1 was down 33 cents at $54.77 a barrel. Activity was thin because of the U.S. Labor Day public holiday.
The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - as China put new duties on U.S. crude, the latest escalation in a bruising trade war.
U.S. President Donald Trump said the two sides would still meet for talks this month. Trump, writing on Twitter, said his goal was to reduce U.S. reliance on China, and he again urged American companies to find alternative suppliers outside China.
“Even as President Trump has indicated that scheduled talks between the U.S. and China are still to proceed, the market is more and more resigned to a protracted standoff between the two countries and will be looking towards central bank easing to shore up risk appetite,” BNP Paribas’ Harry Tchilinguirian said.
Beijing’s levy of 5% on U.S. crude marks the first time the fuel had been targeted since the world’s two largest economies started their trade war more than a year ago.
Saudi Arabia on Monday named Yasir al-Rumayyan, the head of its sovereign wealth fund, as chairman of state-run oil giant Aramco, replacing Energy Minister Khalid al-Falih in the position.
Oil output in August from members of the Organization of the Petroleum Exporting Countries rose for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by top exporter Saudi Arabia and declines caused by U.S. sanctions on Iran.
In the United States, Hurricane Dorian was forecast to bring heavy rains and a storm surge late Monday through Wednesday to Florida’s Atlantic coast before it moves northward along the coasts of Georgia, and the Carolinas.
The National Hurricane Center called for Dorian to spare the U.S. mainland a direct hit. If it remains offshore, the storm would be unlikely to result in reduced fuel demand that typically follows storm flooding and power outages.
U.S. energy companies also cut drilling rigs for a ninth month in a row to the lowest level since January last year. Total U.S. crude output fell in June for the second month in a row, according to an Energy Department report on Friday. [RIG/U]
Graphic on U.S. oil rig count: here
Reporting by Gary McWilliams in Houston, Dmitry Zhdannikov in London and Aaron Sheldrick in Tokyo; Editing by Dale Hudson, Paul Simao and Peter Cooney