Oil Slides as Latest China Tariffs Reignite Demand Fears

Oil prices fell Friday after China said it would impose tariffs on $75 billion worth of additional U.S. products including crude imports and President Trump said he would respond, the latest trade developments that investors fear could crimp fuel consumption.

U.S. crude futures fell 3.1% to $53.63 a barrel on the New York Mercantile Exchange following the announcement, the newest salvo in the U.S.-China trade spat that has swung markets in recent months. Oil is about 19% below its April peak with analysts wary that softening demand and steady supply will result in a glut.

Brent crude, the global gauge of prices, declined 2% to $58.70 a barrel on the Intercontinental Exchange.

U.S. crude is among the many products affected by new Chinese duties in the coming months, and some analysts are wary that the latest tariffs will further slow the global economy and weaken commodity demand broadly. Chinese imports of U.S. oil have generally fallen in recent months as the drawn-out trade spat between the world's two largest economies continues.

"We don't need China and, frankly, would be far better off without them, " Mr. Trump said on Twitter, adding that he would respond to the latest Chinese duties later Friday.

Many organizations have already revised down their expectations for oil-demand growth in 2019, increasing pressure on the Organization of the Petroleum Exporting Countries and other large suppliers to limit output moving forward.

Generally rising inventories in the U.S. and globally have also added to fears of excess supply, with several new production sources around the world also expected to boost global crude output next year.

Investors are looking ahead to scheduled trade talks between the U.S. and China next month to see if the two sides can reach a compromise.

Before Mr. Trump's tweets, oil had pared some of its earlier drop after Federal Reserve Chairman Jerome Powell said in prepared remarks that the Fed was prepared to provide more stimulus if an overseas economic slowdown engulfs the U.S. The comments came at the central bank's annual retreat in Jackson Hole, Wyo., and were an encouraging sign for those who hope lower interest rates globally will keep the economy on solid footing.

Elsewhere in commodities Friday, natural-gas futures fell 0.3% to $2.152 a million British thermal units, also hurt by continuing fears of oversupply.

Most-active futures for copper, an industrial metal that counts China as the largest source of global demand, declined 0.8% to $2.5385 a pound on the Comex division of the New York Mercantile Exchange to extend a recent slide.

Gold added 1.8% to $1,535.80 a troy ounce, climbing around six-year highs as nervous investors continued to boost the safe-haven metal.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com


  (END) Dow Jones Newswires
  08-23-19 1148ET
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