HOUSTON: Oil prices ticked higher on Tuesday but remained near four-year lows as recession fears exacerbated by trade conflict between the United States and China, the world’s two biggest economies offset a recovery in equity markets.
Brent futures were up 66 cents, or 1.03%, at $64.87 a barrel at 10:13 a.m. EDT. US West Texas Intermediate crude futures rose 75 cents, or 1.24%, to $61.45. The two benchmarks had slumped by 14% and 15% respectively on Monday after US President Donald Trump’s April 2 announcement of “reciprocal tariffs” on all imports. On Tuesday Beijing vowed not to bow to what it called US “blackmail” after Trump threatened an additional 50% tariff on Chinese goods if the country did not lift its 34% retaliatory tariff.
China’s commerce ministry said the country “will fight to the end,” ratcheting up fears over the global economy. “The scenario has presented a case for a global recession, where fears of energy demand declining have emerged,” said Alex Hodes, director of market strategy at financial services firm StoneX, in a note on Tuesday. Goldman Sachs forecast that Brent and WTI crude prices would be at $62 and $58 a barrel by December 2025, and at $55 and $51 by December 2026, respectively, under different scenarios. The US administration has indicated a strong preference for reducing crude prices to $50 or lower, considering this goal a top priority among its objectives, according to Natasha Kaneva, head of global commodities strategy at J.P.Morgan.
“This includes being willing to endure a ‘period of industry disruption’ similar to the one experienced by the shale sector during the 2014 price war between OPEC and shale, if it ultimately results in lower cost of oil production,” Kaneva said.
Comments
Comments are closed for this article.