International oil prices slip as trade spat escalates; US crude stock drop supports

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SINGAPORE (Aug 23): International oil prices slipped on Thursday, weighed down by the escalating trade dispute between the United States and China, although a decline in US commercial crude inventories offered some support.

International benchmark Brent crude oil futures were at US$74.63 per barrel at 0422 GMT, down 18 cents, or 0.2%, from their last close.

West Texas Intermediate (WTI) crude futures were at US$67.90 per barrel, up 4 cents from their last settlement, buoyed by the decline in US crude inventories.

International markets weakened as the intensifying trade spat between the United States and China was seen as a drag on economic growth.

The United States and China escalated their acrimonious trade war on Thursday, implementing punitive 25% tariffs on US$16 billion worth of the other's goods. Washington is holding hearings this week on a proposed list of an additional US$200 billion worth of Chinese imports to face duties.

"These (overall) measures are expected to shave up to 0.3-0.5 percentage points from China's real GDP growth in 2019," said rating agency Moody's Investor Service.

"For the US ... trade restrictions will trim off about one quarter of a percentage point from real GDP growth to 2.3% in 2019.".

In US oil markets, a decline in commercial crude inventories provided WTI with stronger support than Brent.

Greg McKenna, chief market strategist at futures brokerage AxiTrader said the US crude price support came "as the EIA inventory data showed a big draw in US crude and a solid run rate of 98.1% for refineries".

US commercial crude oil inventories fell by 5.8 million barrels in the week to Aug 17 to 408.36 million barrels, the Energy Information Administration (EIA) said on Wednesday.

In production, US crude oil output rose back to 11 million barrels per day, the EIA report said.

That means the world's three top producers, Russia, the United States and Saudi Arabia, now all churn out around 11 million bpd, meeting a third of global demand.