(MENAFN- Baystreet.ca) While the oil market was jittery awaiting a Fed hint at interest rate policy, China retaliated in the trade war with the U.S., announcing plans to slap tariffs on US$75 billion worth of American goods and sending oil prices diving early on Friday.
As of 09:03 a.m. EDT, WTI Crude was down 2.89 percent at $53.75 and Brent Crude was down 1.92 percent at $58.77.
After the Chinese announcement of measures to retaliate for the planned U.S. tariffs on Chinese imports, WTI Crude erased its gains for this week as the renewed escalation in the trade spat again worried investors and traders about the future of the global economy and global oil demand growth.
According to the Chinese announcement, China will place tariffs on a range of U.S. products, including crude oil, in two batches starting on September 1 and on December 15.
Markets were calmer earlier on Friday, although oil was trading slightly down, as equity and commodity traders waited for a speech by U.S. Federal Reserve chairman Jerome Powell later on Friday at a meeting of global central bankers in Jackson Hole, Wyoming.
Market participants will be looking at signs of Fed's future policy regarding interest rates, and whether the recent rate cut was a one-off event, or whether it would be followed by a series of cuts to prop up the economy. The Fed is under fire from U.S. President Donald Trump who has been repeatedly calling for rate cuts and blaming the Fed for everything economy-related in the United States.
But the Chinese tariff announcement kind of stole the show from the Fed, at least early on Friday.
This week, oil prices hadn't moved too much in either direction as the American Petroleum Institute (API) reported on Tuesday a crude oil inventory draw of 3.45 million barrels for the week ending Aug 15, compared to analyst expectations of a 1.889-million barrel draw, but it failed to move oil much higher.
By Tsvetana Paraskova for Oilprice.com
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