(Bloomberg) -- Oil held losses after its first monthly drop since May as a deepening trade war with no end in sight stoked global growth fears.
Futures were steady in New York after closing down 2.8% on Friday to cap a 5.9% loss in August. U.S. tariffs on a further $110 billion of Chinese imports -- including footwear, apparel and certain technology items -- took effect Sunday. Additional Chinese levies on American products -- including agricultural goods and oil for the first time -- also kicked in.
The outlook for Chinese manufacturing deteriorated further in August, the latest evidence of the impact the trade conflict is having on the global economy. Face-to-face talks between American and Chinese negotiators scheduled for this month are still on, President Donald Trump said Sunday, but investors see very little chance of a near-term breakthrough. Hedge funds last week raised bets by 14% that West Texas Intermediate crude will drop.
“Remaining hopes of a last-minute deal have now come off,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. ‘It’s the lack of light at the end of the tunnel that is depressing prices.”
WTI for October delivery declined 4 cents to $55.06 a barrel on the New York Mercantile Exchange as of 11:31 a.m. in Singapore after falling as much as 1.1% earlier. The contract lost $3.48 in August.
Brent for November settlement fell 29 cents, or 0.5%, to $58.96 a barrel on the ICE (NYSE:ICE) Futures Europe Exchange. The October contract, which expired Friday, lost 7.1% last month. The global benchmark crude traded at a $4.10 premium to WTI for the same month.
The U.S. imposed previously announced 15% duties on a wide range of Chinese consumer goods. Another batch of about $160 billion of Chinese products -- including laptops and mobile phones -- will be hit with 15% levies on Dec. 15.
See also: Trade War Is About to Hit Your Pocket. Literally: David Fickling
Hurricane Dorian came ashore in the Bahamas tied as the most powerful storm to hit land anywhere in the Atlantic. Crude’s drop on Friday was driven by the prospect of Dorian reducing gasoline demand in Florida, Georgia and South Carolina, Jeffrey Halley, a senior market analyst at Oanda Corp., said in a note. WTI could quickly recoup those losses if Dorian looks like it will miss the Florida panhandle and the Carolinas, he said.
