Oil retreated on Tuesday morning in Asia, going down from its earlier gains in the session. The fall had come as a result of comments made by White House trade adviser, Peter Navarro, to the press on Monday that the U.S.’s trade deal with China is “over.”
The statement came as a shock to investors who had been optimistic about salvaging the phase one trade deal that was reached earlier in the year.
The risks of an escalation of U.S.-China tension is that there could be a delay in the global economic recovery from the COVID-19 pandemic, thereby increasing the risks of an oversupply. China is yet to respond to Navarro’s comments.
In the previous session, Brent futures gained 2.1% and WTI futures rose almost 2%; however, the statement has crushed the hopes of many investors who had been expectant as a result of the previous gains.
Albeit panicked, investors are currently waiting for the predictions in crude oil supply to be announced by the American Petroleum Institute (API) as well as the U.S. Energy Information Administration (EIA), which is due later in the day and on Wednesday respectively.