Brent crude fell $2.08, or 3.36%, to settle at $59.81 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 97 cents, or 1.74%, to settle at $54.69 a barrel, finding some support from a draw in inventories at the Cushing, Oklahoma, storage hub and delivery hub for WTI.
Stocks at Cushing fell nearly 2.4 million barrels in the week to Aug. 2, traders said, citing data from market intelligence firm Genscape. WTI’s discount to Brent narrowed to $5.15 a barrel, its narrowest since July 2018.
Both crude benchmarks plummeted by more than 7% last Thursday to their lowest level in about seven weeks after Trump’s announcement, before recovering somewhat to leave Brent down 2.5% on the week and U.S. crude 1% lower.
Trade war worries hit global equities again on Monday, while stoking a rally in safe-haven assets including the Japanese yen, core government bonds and gold.
“While latest trade headlines will be forcing downward adjustment in global oil demand expectations for this year and possibly next, it is looking quite likely that Asia will bear the brunt of the expected slowing in oil demand growth,” Jim Ritterbusch of Ritterbusch and Associates said in a note.
Trump last week said he would impose a 10% tariff on $300 billion of Chinese imports starting on Sept. 1 and said he could raise duties further if China’s President Xi Jinping failed to move more quickly towards a trade deal.
The announcement extends U.S. tariffs to nearly all imported Chinese products. China on Friday vowed to fight back against Trump’s decision, a move that ended a month-long trade truce.
On Monday, China let the yuan tumble beyond the 7-per-dollar level for the first time in more than a decade.
A lower yuan raises the cost of dollar-denominated oil imports in China, the world’s biggest crude oil importer.
Signs of rising oil exports from the United States also pressured prices on Monday. U.S. shipments surged by 260,000 barrels per day (bpd) in June to a monthly record of 3.16 million bpd, U.S. Census Bureau data showed on Friday.
Lending some support to prices, Iran’s seizure of an Iraqi oil tanker raised concerns about potential Middle East supply disruptions in the Gulf.
Iran will no longer tolerate “maritime offences” in the Strait of Hormuz, its foreign minister said on Monday.