Oil pared its weekly advance as concerns over the U.S.-China trade war came back to the fore.
Futures in New York fell 0.2% on Friday, while Brent also declined. Yet, both benchmarks still posted the biggest weekly rise since early April. While tensions in the Middle East increased earlier this week following pipeline and tanker attacks, the threat of an escalating trade war remains present, with China’s state media signaling a lack of interest in resuming talks with the U.S.
When it comes to the trade war, there were “expectations of this trade deal being signed before it was signed and now we are dealing with the repercussions of that optimism,” said Ashley Petersen, an oil analyst at Stratas Advisors LLC in New York. Prices are losing steam “because there hasn’t been as much geopolitical news over the last two days or so, but that’s definitely what led to support to the week overall.”
The recent attacks on oil tankers and pumping stations have highlighted how disruptive a major war in the Middle East would be to crude flows. Still, investors remain concerned that the escalation of the U.S.-China rift will only hurt global oil demand.
Tensions between Saudi Arabia and Iran have helped support crude prices, yet the market’s reaction has been “pretty measured,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. “The deterioration of the U.S.-China trade situation is a big negative for crude and a big negative for the Asian economy.”
WTI crude for June delivery slid 11 cents to settle at $62.76 a barrel on the New York Mercantile Exchange. Prices rose 1.8% for the week.
Brent for July settlement fell 41 cents to end the session at $72.21 a barrel on the London-based ICE Futures Europe exchange. The global crude benchmark was up 2.3% for the week.
Meanwhile, traders will be watching this weekend’s meeting of OPEC producers and allies in Jeddah for signals as to whether the group will aim to fill supply gaps following U.S.-imposed sanctions on Iran.
SOURCEL; BLOOMBERG ���N