Oil operations in the Permian Basin near Midland, Texas
Nick Oxford | Reuters
Crude prices plunged on Friday after China unveiled new tariffs on U.S. goods, dampening expectations of global economic growth.
U.S. oil traded 3.2% lower, or $1.76 at $53.58 per barrel and reached its lowest level in a week. Brent oil fell 2%, or $1.19 to trade at $$58.75 per barrel.
China said it will slap tariffs on $75 billion worth of U.S. imports ranging from 5% to 10%. The tariffs will take effect in two batches on Sept. 1 and Dec. 15. The goods targeted by China in these tariffs include autos.
Earlier in the day, crude prices were up slightly while investors awaited clues on the U.S. Federal Reserve’s monetary policy.
A speech by Fed Chair Jerome Powell later on Friday at a meeting of global central bankers in Jackson Hole, Wyoming, is expected to provide clues on whether the U.S. central bank will cut interest rates for a second time this year to boost the world’s largest economy.
Traders’ expectations of further U.S. monetary easing were clouded by comments from two Fed officials on Wednesday who said they do not see a case for a rate cut now.
“If Powell talks about lower for longer and reverses some of the hawkish comments that we heard from Fed members earlier this week, we could see it supporting oil,” said Michael McCarthy, chief market analyst at CMC Markets in Sydney.