Trump Aide Trade Comment Stymies Crude Oil



(Bloomberg) -- Oil prices plowed lower as a White House adviser warned the U.S. and China are still far apart in trade talks, adding to economic jitters that already had prices sliding toward the third loss in four days.

Futures fell as much as 4.1 percent in New York, joining a tumble for U.S. equities. Markets hit a wall after reports that Larry Kudlow said a “sizable distance" remained between the world’s two biggest oil consumers as they look to avoid an escalation of their tariff war. Prices had retreated earlier as official growth forecasts for major European economies were slashed.

“Clearly if we have an all-out trade war, with quite a bit of the market’s growth slated to come from China and other emerging markets, that ain’t bullish for oil," said Kyle Cooper, a Houston-based consultant at Ion Energy Group LLC.

Oil has faltered this month after major gains in January. Higher American output is threatening to offset reductions by the Organization of Petroleum Exporting Countries and its partners. While sanctions on Venezuela and Iran have propped up prices, investors are still wary about the global economy. President Donald Trump has threatened more trade tariffs if the two sides can’t reach a deal by March 1.

Crude and other dollar-priced commodities also slipped as the U.S. currency strengthened Thursday. In Libya, meanwhile, military commander Khalifa Haftar claimed to have taken control of the Sharara oilfield, a move that could restore 300,000 barrels of day to global markets.

West Texas Intermediate crude for March delivery slipped $2.13 to $51.88 a barrel on the New York Mercantile Exchange as of 12:06 p.m. local time.

Brent for April settlement dropped $1.99 to $60.70 a barrel on the London-based ICE Futures Europe exchange.

Supplies from OPEC face heightened uncertainty after Haftar, who controls eastern Libya, said his forces have taken possession of the country’s largest oil field, though other reports say fighting continues. The field has been closed since December by armed residents demanding better pay and investment in the remote area.

War-torn Libya was exempted from the OPEC+ alliance’s agreement to reduce production. Restoring flows from Sharara “would go some way to diluting supply curbs from its OPEC peers," analysts at London-based broker PVM Oil Associates said in a note Thursday.

Prices gained on Wednesday after the U.S. Energy Information administration reported that inventories of winter fuel in the U.S. fell more than expected last week as cold polar air blasted the nation.

With assistance from Tsuyoshi Inajima. To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net;Grant Smith in London at gsmith52@bloomberg.net. To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net; Simon Casey at scasey4@bloomberg.net, Carlos Caminada.



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