Oil Holds Five Month Low Along With Fears Of China/U.S. Tensions, Global Glut

Meanwhile, India claims to reverse course on Russian oil purchases: File Image/Pixabay

For a second consecutive session, oil prices on Wednesday maintained their lowest settlement since May 7, concurrent to the rising level of concern among traders over tensions between the U.S. and China.

Brent settled down 48 cents at $61.91 per barrel, and West Texas Intermediate settled down 43 cents at $58.27.

Washington and Beijing have imposed additional port fees on ships carrying cargo between the two countries, which analysts think could disrupt global freight flows; also, U.S. president Donald Trump threatened to increase tariffs even further against China after it vowed to increase rare earth export controls.

However, U.S. treasury secretary Scott Bessent said Washington does not want the conflict to escalate and stressed that Trump is ready to meet Chinese president Xi Jinping in South Korea later this month.

Also influencing trading on Wednesday for the second straight session was the International Energy Agency, which earlier warned that the global oil market could incur a far bigger than previously thought surplus: on the order of up to 4 million barrels per day (bpd).

On a more positive note, Indian prime minister Narendra Modi reportedly told Trump that his country would stop buying Russian oil and that the shift would happen within a short period of time.

India's trade with Russia caused Trump in August to announce he would increase tariffs on that country by 25 percent, bringing total tariffs against New Delhi to 50 percent; the turnaround in policy, if followed through by Modi, will presumably further pressure Moscow to seek a peace treaty with Ukraine.

Trump said, "That's a big step; now we're going to get China to do the same thing."

As for trading influencers for the remainder of the week, the Energy Information Administration is due to release weekly U.S. inventory data on Thursday following that country's Columbus Day holidays.

Analysts predict a crude stockpile rise of about 0.2 million barrels last week, which would be the first time oil was added to storage for three weeks in a row since April.