The Financial Post reports in its Wednesday, Aug. 7, edition that collateral damage from the escalating trade war between China and the United States has hit oil demand hard and could push prices lower if trade tensions continue.
The Post's Geoffrey Morgan writes that Citigroup analyst Edward Morse says of the increasingly tense trade fight between the world's two largest economies: "It's bearish. It's been bearish all along." Oil-producing countries such as Canada will continue to see their main export caught in the crossfire as most analysts expect the trade war will drag on.
Mr. Morse says the trade war has caused Chinese economic growth to slow, with every 1-per-cent drop in Chinese GDP growth translating to a 250,000-barrels-per-day decline in oil demand.
In addition, he says the trade war has had a larger impact on oil demand by slowing global trade growth from 7 per cent before the tariffs to just 2.5 per cent after. As a result, global oil demand has declined by half a million barrels per day. Mr. Morse says: "Just the collapse of trade growth by itself has torn 500,000 bpd out of the demand. It has had a tremendous effect."
He sees Brent prices in $50-per-barrel range by the middle of 2020.
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