Oil prices hit 5-month low on US-China trade tensions, looming supply surplus
Oil prices eased on Wednesday to a five-month low on escalating U.S.-China trade tensions and the International Energy Agency's prediction of a supply surplus in 2026.
Brent crude futures fell 48 cents, or 0.8%, to settle at $61.91 a barrel. U.S. West Texas Intermediate (WTI) futures fell 43 cents, or 0.7%, to settle at $58.27. Those were the lowest settlements for both benchmarks since May 7 for a second day in a row.
Bank of America said Brent prices could slip below $50 a barrel if U.S.-China trade tensions intensify while OPEC+ production ramps up.
The world's two largest oil consumers have renewed their trade war over the last week, with the U.S. and China imposing additional port fees on ships carrying cargo between them. The tit-for-tat moves could disrupt global freight flows.
Last week, China announced it would increase rare earth export controls and U.S. President Donald Trump threatened to raise tariffs on Chinese goods to 100% and tighten software export curbs from November 1.
On Wednesday, U.S. Treasury Secretary Scott Bessent insisted that Washington did not want to escalate the trade conflict, addingTrump is ready to meet Chinese President Xi Jinping in South Korea later this month.
Deflationary pressures persisted in China, with both consumer and producer prices falling in September. A prolonged property market slump and trade tensions also weighed.
Renewed pose a "material" downside risk to the economic outlook, making it more important that the U.S. Federal Reserve cut its benchmark interest rate, Fed Governor Stephen Miran said on Wednesday. Looser economic policies can boost economic growth and demand for oil.
U.S. retail sales excluding motor vehicles and parts likely posted further gains in September, data from the Chicago Fed showed, though part of the rise probably reflected higher prices.
On Tuesday, the IEA said the global oil market could face a surplus next year of up to 4 million barrels per day, wider than its previous forecast, as OPEC+ and others raise output and demand remains sluggish.
Source: Reuters
