Oil prices slipped on Thursday as the ongoing trade dispute between the United States and China continued to weigh on the market.  Equinor photo.

Oil prices settled slightly down from Wednesday’s values

Oil prices fell on Thursday as the trade dispute between the United States and China continued to escalate, causing investors concern about a potential fall in demand for crude.

At the end of the session, Brent crude futures were down 21 cents to settle the day at $72.07/barrel and US West Texas Intermediate slipped 13 cents to $66.81/barrel.  The Canadian Crude Index bucked the trend, rising 91 cents to $40.10.

Both Brent and US WTI fell over 3 per cent on Wednesday after data from the US Energy Information Administration showed a smaller-than-expected drop in US crude stocks and a surprise build of 2.9 million barrels in gasoline inventories.  Prior to the data release, analysts polled by Reuters forecast a decline in US gasoline stockpiles by 1.7 million barrels.

“The ability of gasoline to hang in there despite strong demand weighed on the market,” John Kilduff, a partner at Again Capital Management told Reuters.  Kilduff added that previously the market was “racing higher” on supply shortage concerns, but now, those concerns are gone. “Supply is seen as sufficient to meet the pretty robust demand picture,” said Kilduff.

Also heavy on the minds of investors are concerns about the mounting trade dispute between the United States and China.  Earlier in the week, China announced it will impose tariffs of 25 per cent on a further $16 billion in US imports, including fuel, steel products, automobiles and medical equipment.

As of yet, crude oil has not been added to the list of US goods facing tariffs in China.

The trade war is causing fear that the world’s two largest economies could be slowed, which would cut the demand for commodities.

As well, demand for crude in China picked up slightly in July after two months of decline, however, crude imports are still among the lowest in 2018.  The decline is mostly due to a drop-off in demand from independent, or teapot, refineries.

On Thursday, Iraq cut its official selling price to its Asian customers for September cargoes of Basra Light crude.

The market is bracing for the re-imposition of US sanctions against Iran.  On Tuesday, the Trump administration announced it was placing sanctions on some Iranian goods, excluding crude oil, which will be under sanctions beginning in November.

President Trump says he wants to see as many countries as possible cut their imports of Iranian crude to zero.

“The impact of it is the greatest known unknown of the year. If worst comes to worst and 1.5-2 million b/d (barrels per day) of Iranian disappears from the market … calculations will go out of the window and oil bears will have to brace themselves for a very rough ride,” PVM Oil Associates analyst Tamas Varga told Reuters.