Oil prices fell for a second day yesterday on worries about falling fuel demand after U.S. President Donald Trump’s comments doused optimism over China-U.S. trade talks and reignited concerns on global economic growth.
Brent crude futures fell 46 cents to $62.64 a barrel, while U.S. West Texas Intermediate crude dropped to $56.89, down 40 cents.
Both prices have fallen to their lowest since before the attack on Saudi Arabian oil facilities on September 14.
“What really pulled the rug from underneath oil was Donald Trump’s comments on trade last night…. He’s still maintaining quite a belligerent position,” said Jeffrey Halley, senior market analyst for Asia Pacific at OANDA.
Trump criticised China’s trade practices at the United National General Assembly on Tuesday and said he would not accept a “bad deal” in U.S.-China trade negotiations.
China is the world’s largest oil importer and second-largest crude user while the United States is the largest consumer.
Trump also said he saw a path to peace with Iran even as he denounced Iran for “bloodlust”, cooling geopolitical premiums in oil prices.
Oil rallied last week following a crippling attack on Saudi Arabia’s oil installations that has disrupted supplies from the world’s top exporter. To meet its supply obligations to Saudi refineries overseas, Saudi Aramco is buying oil from other Middle East producers.
“The risk premium has died off for now,” Halley said, adding that the main driver for oil markets now is trade uncertainty that could impact demand.
Prices were also weighed down by an unexpected build in U.S. crude inventories last week.