Oil prices steadied on Tuesday, following a turbulent session triggered by uncertainty over the fate of U.S.-China deal.
Markets were upset by shocking comments from White House trade adviser, Peter Navarro, who said the hard-won agreement was “over”.
However, later assurances from President Donald Trump that the deal was fully in force did much to calm galloping nerves.
Brent crude dipped by 26 cents or 0.6% to $42.82 a barrel at 06:45 West Africa Time after hitting a session low of $42.21.
U.S. West Texas Intermediate was weaker by 38 cents or 0.9% at $40.35 per barrel, having hit a low of $39.76.
Bonny Light, Nigeria’s banner crude grade, was up by 14 cents or 0.33% at $41.94 a barrel at the last session but Qua Iboe, another major national grade, shed 20 cents or 0.47% to close at $41.92 a barrel.
U.S-China relations have strained ever since the coronavirus pandemic that erupted in China hit the U.S. hard.
President Trump and his administration have persistently lambasted Beijing for lack of transparency about the virus outbreak.
He later released a statement saying he had been “speaking to the lack of trust” in the Chinese administration, the comments had been “taken wildly out of context” and the trade deal remained intact.
“These comments from Navarro came out of nowhere. Energy traders will likely remain sceptical of the relationship between the U.S. and China if the Chinese fail to quickly make up for the shortfall with their promises of agricultural goods (purchases),” said Edward Moya, Senior Market Analyst at brokerage OANDA.
Prices had advanced earlier in the session with the reopening of some U.S. states and nations around the world after coronavirus lockdowns sustaining a rebound as fuel demand improves.
Streets were clogged with traffic in New York as U.S. worst affected city emerged from over 100 days of lockdown.
Middle East conflicts also boosted oil prices.
Early on Tuesday, the Saudi-led coalition in Yemen said it intercepted three ballistic missiles by Yemen Houthis towards the Saudi Arabian cities of Najran and Jizan, according to Saudi state TV.
Meanwhile, U.S. and Canadian oil and gas drillers reduced the number of drills they are operating to a record low.
“U.S. onshore production has now given up two full years of (volume) gains. It supports the market supposition that even with a rebound in price, the capital investment that had already been tapering off in Q1 isn’t flowing back quickly,” said Stephen Innes, Chief Global Markets Strategist, at AxiCorp.
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