By Barani Krishnan
Investing.com – President Donald Trump’s tendency of extending one hand to China and keeping the other ready to swat is costing oil bulls. Crude prices fell again on Tuesday on reports that the White House was targeting China with more punitive action, even as bilateral trade talks are set to continue.
{8849|U.S. West Texas Intermediate crude}} was down 38 cents, or 0.7%, at $52.37 per barrel by 1:40 PM ET (17:40 GMT) on reports that the Trump Administration was moving ahead with efforts to limit capital flows into China and adding more Chinese company's to a blacklist.
U.K. Brent oil was down 36 cents, or 0.6%, at $57.99.
A South China Morning Post report said that China had toned down expectations ahead of high-level trade talks between the two countries set to resume on Thursday after being stalled since May. The report said the Chinese delegation could depart Washington a day earlier than scheduled.
China also signaled it would hit back after the U.S. placed eight of the country’s technology giants on a blacklist over alleged human rights violations against Muslim minorities, Bloomberg reported.
Asked Tuesday whether China would retaliate over the blacklist, foreign ministry spokesman Geng Shuang told reporters: “Stay tuned.” He also denied that Beijing was guilty of human rights abuse in the far west region of Xinjiang.
“Obviously, this is casting a darker shadow on the trade talk optimism that we saw yesterday,” Phil Flynn, energy markets analyst at the Price Futures Group in Chicago, said.
And it’s not just trade and political troubles that were in oil’s way on Tuesday.
Demand for crude is also shaping up to be a problem with the U.S. Energy Information Administration cutting this year’s world oil demand growth by 50,000 barrels per day and its 2020 projection by 100,000 bpd.
The EIA also projected U.S. crude output to rise by 1.27 million bpd to 12.26 million this year and by 910,000 to reach 13.17 million in 2020.