Crude oil futures were lower in mid-morning trade in Asia Wednesday after initial optimism over the signing of a Phase 1 US-China trade agreement was dented by reports that the US would maintain tariffs on Chinese goods until after a Phase 2 deal was signed.
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At 11:14 am Singapore time (0314 GMT), front-month March ICE Brent crude futures were down 12 cents/b (0.19%) from Tuesday's settle at $64.37/b, while the NYMEX February light sweet crude contract was down 12 cents/b (0.21%) at $58.11/b.
"The latest expectation that the US will not cut more tariffs until post [US] elections and Huawei potentially seeing more restriction of sales to the US throws a spanner in the works for the improving sentiment," IG market strategist Pan Jingyi said.
"Crude oil prices [are] likewise taking a beating with the concern that the high trade barriers may remain in place and continue to impede demand for a long time to come," Pan added.
The signing of the US-China Phase 1 trade deal is scheduled for later Wednesday in Washington. According to media reports, China has pledged to buy an additional $50 billion in US energy products as part of the deal.
"Details are closely watched as market optimism appears to be waning on reports that the bulk of existing tariffs on Chinese goods exports to the US are likely to stay in place until after the US presidential election in
November," UOB analysts said Wednesday.
China is the world's largest buyer of imported crude at close to 11 million b/d. The market also remains watchful of the potential impact on flows of US crude.
As of 0314 GMT, the US Dollar Index was down 0.03% at 97.115.