U.S. oil gauge drops, while Brent crude rallies

  • Written by MarketWatch
  • Published in Economics

The U.S. oil benchmark fell while a global crude gauge rose Monday, as investors assessed escalating trade tensions and braced for a potential output boost.

July West Texas Intermediate crude CLN8, -0.54%[1] lost 35 cents, or 0.5%, to $64.71 a barrel, but August Brent crude LCOQ8, +0.71%[2] tacked on 56 cents, or 0.8%, to $74 a barrel.

On Friday, both WTI and Brent notched big drops for the session and the week[3], weighed by expectations that the Organization of the Petroleum Exporting Countries and its allies will agree to increase production at a meeting this Friday[4]. WTI saw its lowest settlement since June 6, and Brent, its lowest since May 2.

Investors also remain fixated on how trade-related disagreements[5] between the U.S. and China are escalating. President Donald Trump on Friday announced tariffs on $50 billion worth of Chinese imports[6], and Beijing retaliated by targeting high-value American exports[7].

“China appears to be considering import tariffs on U.S. crude oil,” said Commerzbank analysts in a note Monday.

“The possible punitive tariff of 25% means that U.S. crude oil would no longer be a low-cost alternative despite the current price discount,” they wrote, adding that they “therefore expect the high price gap between Brent and WTI to remain in place during the summer months.”...

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