Oil drops to lowest since Aramco attacks after Trump scolds China

By Collin Eaton HOUSTON (Reuters) - Oil prices plunged more than 2% on Tuesday to their lowest since the Sept. 14 attacks on Saudi Arabia's key oil facilities, after U.S.

Reuters September 25, 2019 02:07:21 IST
Oil drops to lowest since Aramco attacks after Trump scolds China

Oil drops to lowest since Aramco attacks after Trump scolds China

By Collin Eaton

HOUSTON (Reuters) - Oil prices plunged more than 2% on Tuesday to their lowest since the Sept. 14 attacks on Saudi Arabia's key oil facilities, after U.S. President Donald Trump rekindled fears the Sino-American trade conflict that has crimped energy demand is far from over.

In a United Nations address, Trump accused China of unfair trade practices, including "massive" market barriers, currency manipulation and intellectual property theft, a few days after officials from the world's two largest oil-consuming economies held inconclusive trade talks in Washington.

"Hopefully we can reach an agreement that will be beneficial for both countries," Trump said. "As I have made very clear, I will not accept a bad deal."

Brent crude futures , the international standard, settled $1.67, or 2.6%, lower at $63.10 a barrel, while West Texas Intermediate futures ended at $57.29 a barrel, down $1.35, or 2.3%.

Trump "ratcheted up the U.S.-China trade war again," said John Kilduff, a partner at Again Capital LLC in New York. "It wasn't a constructive tone in trying to get that resolved, and we know how sensitive oil prices are to the back and forth."

The U.S. president's address left the oil market with the grim impression that "it's not a deal that's going to get done quickly," which could continue to hamper global oil demand growth, said Robert Yawger, director of energy futures at Mizuho in New York.

U.S. stocks fell, with the S&P 500 and the Nasdaq poised for the biggest declines in a month, as calls for impeachment of Trump gained momentum, while weak consumer confidence data added to worries over the prolonged Sino-U.S. trade war. <.DJI>

A private sector report showed U.S. consumer confidence fell by the most in nine months in September.

Sluggish economic data in leading European economies and Japan also weighed on crude prices, analysts said.

"We continue to see a constant revision downward for 2019 oil demand," with many forecasters predicting demand to grow around 1 million bpd or less, said Andy Lipow, president of Lipow Oil Associates in Houston.

"Given continued U.S. production growth and new production in Norway and Brazil, the market feels oversupplied, even though Saudi oil production has been impacted over the past 10 days," Lipow said.

However, a Reuters poll forecast U.S. crude stockpiles dropped last week after Tropical Storm Imelda disrupted energy operations on the U.S. Gulf Coast. [EIA/S]

Weekly inventory data from the American Petroleum Institute, an industry group, will be released on Tuesday at 4:30 p.m. EDT (2030 GMT), followed by the government's report on Wednesday.

Some analysts also expect U.S. crude exports to increase over coming weeks after the attack on Saudi Arabia's largest oil-processing facility that halved output in the world's top oil exporter.

State oil company Saudi Aramco is buying oil originating in neighbouring countries to meet its supply obligations to foreign refineries, sources familiar with the matter told Reuters. Its trading arm is arranging for crude from the United Arab Emirates and Kuwait to cover its commitments to certain buyers, the sources said.

European powers - Britain, Germany and France - backed the United States in blaming Iran for the Saudi attack, urging Tehran to agree to new talks with world powers on its nuclear and missile programmes and regional security.

At the U.N. General Assembly, Trump denounced Iran, but said there is a path to peace, which somewhat eased the oil market's worries about geopolitical risks, analysts said.

"So far, it doesn't look like there will be a military response," said Phil Flynn, an analyst at Price Futures Group in Chicago.

(Additional reporting by Ahmad Ghaddar in LONDON, Florence Tan in SINGAPORE; Editing by Marguerita Choy and David Evans)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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