Oil dropped to around $56 a barrel after President Donald Trump said the U.S. would impose tariffs on all Mexican goods, opening up a new front in the trade war and further damping the demand outlook.
Futures in New York fell as much as 1.6% after Trump announced the 5% levies, which will be effective from June 10 and could go as high as 25% on Oct. 1., which are aimed at getting Mexico to stop immigrants illegally entering the U.S. That followed a 3.8% tumble Thursday that was driven by rising U.S. gasoline stockpiles and a smaller-than-expected oil draw from storage facilities, which fueled worries about falling demand in the world’s largest economy.
West Texas Intermediate crude for July fell 63 cents, or 1.1%, to $55.96 a barrel on the New York Mercantile Exchange as of 1:11 p.m. in Singapore after dropping as much as 93 cents earlier. The contract is down 4.5% so far this week, taking its drop in May to more than 12%.
Brent for July settlement declined 88 cents, or 1.3%, to $65.99 a barrel on London’s ICE Futures Europe exchange after closing down 3.7% on Thursday. The global benchmark crude was trading at a premium of $10.01 a barrel to WTI.
Source : Bloomberg