HOUSTON, April 8 — Oil prices ticked higher on Tuesday but remained near four-year lows as recession fears exacerbated by trade conflict between the United States (US) and China, the world's two biggest economies, offset a recovery in equity markets.
Brent futures were up 66 cents, or 1.03 per cent, at US$64.87 a barrel at 10.13am. EDT. US West Texas Intermediate crude futures rose 75 cents, or 1.24 per cent, to US$61.45.
The two benchmarks had slumped by 14 per cent and 15 per cent respectively on Monday after US President Donald Trump's April 2 announcement of "reciprocal tariffs" on all imports.
On Tuesday, Beijing vowed not to bow to what it called U.S. "blackmail" after Trump threatened an additional 50 per cent tariff on Chinese goods if the country did not lift its 34 per cent retaliatory tariff.
China's Commerce Ministry said the country "will fight to the end," ratcheting up fears over the global economy.
"The scenario has presented a case for a global recession, where fears of energy demand declining have emerged," said financial services firm StoneX's market strategy director Alex Hodes in a note on Tuesday.
Goldman Sachs forecast that Brent and WTI crude prices would be at US$62 and US$58 a barrel by December 2025 and at US$55 and US$51 by December 2026, respectively, under different scenarios.
The US administration has indicated a strong preference for reducing crude prices to US$50 or lower, considering this goal a top priority among its objectives, said J.P. Morgan's global commodities strategy head Natasha Kaneva.
"This includes being willing to endure a 'period of industry disruption’ similar to the one experienced by the shale sector during the 2014 price war between OPEC and shale, if it ultimately results in lower cost of oil production," she said.
Still, oil prices were up one per cent, which ING's Warren Patterson described as a relief rally aided by steadier equity markets. Wall Street's main indexes on Tuesday bounced back from a heavy selloff.
"The market has sold off heavily in recent days as it starts to price in a significant demand hit. However, how much of a demand hit we (will) see is still very unclear," he said.
Trump also made a surprise announcement on Monday that the US and Iran were set to begin direct talks on Tehran's nuclear programme, but Iran's foreign minister said the discussions would be indirect.
"The talks ... could indeed mark the beginning of the end-game phase in the nuclear drama, in which success could lead to more barrels (of oil) on the market, and failure could trigger a military confrontation," said RBC Capital Markets analyst Helima Croft.
On Monday, a preliminary Reuters poll showed that US crude oil and distillate inventories were expected to have risen last week by about 1.6 million barrels, indicating market expectations of weak demand.
The American Petroleum Institute industry group's weekly inventory data is due later Tuesday, and official data from the Energy Information Administration is due on Wednesday.
— Reuters
