Oil inches above $60 as U.S. delays tariffs on Chinese goods
Oil prices continued to rally yesterday, following reports that the United States has decided to delay the next round of tariffs that were to be imposed on Chinese goods.
The delay gives hope to a skittish market that the trade war really won’t go on forever.For WTI, oil prices had climbed 4.13% to trade at $57.20 as at the time of filing this report. Brent Crude was trading up even more at 4.68%, at $61.31—resuming its over $60 per barrel that it had fallen under during the first week of August as the trade war stoked fears of souring oil demand growth.
The international oil benchmark, Brent crude, had tumbled last week Wednesday to $56 per barrel, its lowest level in seven years as the United States-China trade war worries gripped the market.The decline in oil price imposes a serious threat to Nigeria’s economy as the 2019 budget is based on an oil benchmark of $60 per barrel.
The further decline in oil prices followed an unexpected build in US crude supplies and fears of lower crude demand due to the deepening trade tensions
Yesterday was the fourth straight day of gains for the oil prices—the previous gain helped along by Saudi Arabia’s chat with other OPEC producers about what additional steps the group could take to stanch the price bleed that sought to undermine not only Saudi Arabia’s budget which relies heavily on oil, but its much-anticipated public listing of its crown jewel, Saudi Aramco.
Aramco’s valuation, which Saudi Arabia feels is $2 trillion, is dependent on oil prices. Analysts claim that this $2 trillion valuation is but a pipe dream, and that the real value of Aramco is at most $1.5 trillion.
In addition to the tariff delay, which will now go into force on December 15, the United States will also be taking some of the items on that tariff list off completely, according to its newest policy document published on the Office of the United States Trade Representative website.
While the list hasn’t been made public, it will include items that will be removed “based on health, safety, national security, and other factors”.
The items that will be delayed until December include cellphones, laptops, toys, computer monitors, and some footwear and clothing items, according to the USTR website. Oil will face another challenge this afternoon when the API estimates about crude oil inventory moves will be released.
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