Reuters: Oil prices extend drops as trade wars fan fears in financial markets

09:00, 03 June 2019
Economy
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REUTERS

Front-month Brent crude futures were at $61.12 at 0444 GMT, Reuters said.

That was 87 cents, or 1.4%, below Friday's close.

Read alsoReuters: Oil set for biggest monthly fall since November as trade conflicts spread

U.S. West Texas Intermediate (WTI) crude futures were at $52.91 per barrel, down 59 cents, or 1.1% from its last settlement.

The drops followed price slumps of more than 3% on Friday, which made May the worst-performing month for crude futures since last November.

"Oil prices slid on fresh trade worries after U.S. President Donald Trump stoked global trade tensions by threatening tariffs on Mexico, which is one of the largest U.S. trade partners and a major supplier of crude oil," said Mithun Fernando, investment analyst at Australia's Rivkin Securities, in a note on Monday.

In a typical move for financial markets during times of uncertainty, gold on Monday rose to its highest level in over two months as investors pulled out of risky assets like oil and parked money in perceived safe havens like the precious metal.

Edward Moya, senior market analyst at futures brokerage OANDA in New York, warned "oil remains vulnerable" because of a weakening demand outlook for crude.

"The U.S.-China feud remains most critical to the global growth outlook, but the addition of trade tensions between the U.S. and Mexico raised the slower demand picture for the Americas," he said.

Barclays bank said in a note published last Friday that U.S. March oil consumption "declined significantly year-on-year for the first time since September 2017 ...(as) petroleum demand fell almost 370,000 barrels per day (bpd) year-on-year on weak consumption across the barrel."

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