Investing.com - Oil prices traded lower on Monday as the escalation in the Sino-U.S. trade dispute outweighed tensions in the Persian Gulf.
New York-traded West Texas Intermediate crude futures slid 66 cents, or 1.2%, to $55.00 a barrel by 6:52 AM ET (10:52 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S., fell 79 cents, or 1.3%, to $61.10.
Beijing pulled a one-two punch in the ongoing trade conflict with Washington, allowing the yuan to tumble to its weakest level in a decade against the dollar and reportedly ordering state-owned companies to suspend imports of U.S. agricultural products.
The retaliatory moves were made in the wake of U.S. President Donald Trump’s threat last Thursday to implement 10% tariffs on another $300 billion in Chinese goods from Sept. 1 if trade negotiations do not make progress.
“Now, as the trade war rears its ugly head again, concerns are growing on what it could do to oil demand,” Investing.com senior commodity analyst Barani Krishnan said.
The ongoing trade dispute between the world’s two largest consumers of oil has contributed to the global slowdown, which tends to reduce demand for commodities such as crude.
Mohamed El-Erian, chief economist at Allianz, said that Beijing’s actions “confirm trade tensions escalation is the most likely outcome for now."
Worries over the increasing economic impact outweighed other considerations such as Iran's seizure of another oil tanker in the Persian Gulf on Sunday, accusing the vessel of smuggling fuel on behalf of unnamed Arab countries.
It is the third tanker seizure in the Strait of Hormuz in recent weeks, increasing concerns that the supply of oil from the most important region of the global market could be disrupted.
Baker Hughes’ weekly rig count data, released Friday, showed yet another weekly decline, taking the total number of active rigs down to 770, its lowest level since Feb. 2018.
That is the longest sequence of declines for the series since March, when drillers cut rigs for six consecutive weeks.
The rig count has been on the decline over the past eight months as independent exploration and production companies cut spending on new drilling as they focus more on earnings growth instead of increased output.
In other energy trading, gasoline futures fell 1.3% to $1.7585 a gallon by 6:55 AM ET (10:55 GMT), while heating oil lost 1.2% to $1.8794 a gallon.
Lastly, natural gas futures traded down 3.1% to $2.056 per million British thermal unit.
-- Reuters contributed to this report.