Oil prices slide as US-China trade war heats up
Despite OPEC production cuts and tensions in the Middle East providing support to oil prices in recent weeks, investors’ concern over the US-China trade spat were enough to send the commodity lower on Wednesday.
Oil prices took a major tumble on Wednesday after Chinese officials said they were prepared to restrict rare earth minerals as the country’s trade war with the US ramps up, leading to investors growing increasingly concerned about how the spat will impact crude demand.
Front-month Brent futures hit $68.68 a barrel at 13:45 GMT, down $1.43 from the previous close, after hitting a session low of $68.08. Meanwhile, US West Texas Intermediate (WTI) futures came in at $57.57 a barrel, representing $1.57 decline, after hitting a low of $57.14 a barrel.
US-China trade fears outweigh OPEC supply cuts
OPEC-led production cuts that took effect in January and ongoing political turmoil in the Middle East have provided significant support to oil prices in since the start of the year.
However, investors fear over the impact of worsening trade relations between the world’s two largest economies outweighed oversupply disruptions.
China prepared to play earth metals trump card
The latest cause of concern for investors in the escalating trade war between the US and China came when Chinese officials signalled that they were prepared to restrict exports of rare earth metals, with the country controlling a dominate position in that market.
‘China is the world’s biggest producer of these highly-prized raw materials and is poised to use them as leverage in its trade spat with Washington,’ London brokerage PVM told Reuters.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
See an opportunity to trade?
Go long or short on more than 17,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
