September 18, 2018 / 7:11 PM / 6 months ago

Brent-WTI spread narrows as U.S.-China trade fears soften

FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford/File Photo

(Reuters) - The spread between U.S. crude and global benchmark Brent narrowed on Tuesday as market participants evaluated the latest U.S.-China tariffs exchange as initially less harsh than expected.

The Trump administration’s imposing of 10 percent tariffs effective Sept. 24 was below the 25-percent rate the market had anticipated, and China’s response also was less severe than expected, easing worries the trade dispute would crimp global demand. Tariffs are to rise to 25 percent by the end of 2018.

U.S. crude’s discount to Brent contracted by four cents to $9.33 per barrel on Tuesday after it had mostly widened from around $5 per barrel since early August.

The Brent/WTI spread reached a more than minus $10 per barrel last week, strengthening demand for exports of comparatively cheaper U.S. crude.

Reporting by Collin Eaton; Editing by Alistair Bell

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