Crude oil prices retreated to close lower on Monday, after trending higher early on in the session.
While expectations that crude supply may drop once sanctions against Iranian oil are implemented in November boosted oil prices early on in the day, worries that oil demand may see a decline due to escalating U.S.- China trade tensions dragged down prices as the session progressed.
Last week, there were hopes that U.S. and China will have a fresh round of talks sometime in the near future to sort out issues and diffuse trade tensions. However, the Chinese government is reported to be considering to reject the talks offer as it isn’t prepared to negotiate with a “gun pointed to its head.
Meanwhile, reports suggest that the U.S. government may announce new tariffs on about $200 billion of Chinese goods today. However, the rate of tariff is likely to be 10% and not 25% as earlier proposed.
It is widely expected that China would retaliate and impose duties on certain U.S. goods that come into China.
Crude oil futures for October delivery ended down $0.08, or 0.1%, at $68.91 a barrel on the New York Mercantile Exchange. On Friday, crude oil futures ended up up $0.40, or 0.6%, at $68.99 a barrel.
Concerns about possible supply disruptions due to the impact of hurricane Florence and upcoming U.S. sanctions on Iranian oil supported oil prices on Friday, while a report released by the International Energy Association on
Thursday, showing a record crude output in August, limited oil’s gains.
The IEA also said that production may drop going forward due to falling output from Iran and Venezuela. It added that oil prices could break out above $80 a barrel unless other producers act to offset deepening supply losses from these two countries.
The markets now look ahead to official data from the Energy Information Administration for further direction.