Oil was poised for a sixth weekly loss in New York, the longest run of declines in three years, as a trade war between the world’s two biggest economies stokes fears of weaker growth in energy demand.
Brent for October settlement rose 51 cents to $72.58 on the London-based ICE Futures Europe exchange. Prices dropped 21 cents to $72.07 on Thursday, and are headed for a 0.8 per cent drop this week. The global benchmark crude traded at a $6 premium to WTI for the same month.
West Texas Intermediate crude for September delivery traded at $67.27 a barrel on the New York Mercantile Exchange, up 46 cents, at 8:31am in New York. The contract slipped 13 cents to $66.81 on Thursday. Prices are headed for the longest run of weekly declines since August 2015. Total volume traded was about 15 per cent below the 100-day average.
Futures rose 0.7 per cent, but were still headed for a 1.8 per cent loss this week. The US and China are threatening to slap additional tariffs on imports from each other in a matter of weeks, with the tit-for-tat protectionist measures set to expand. At the same time, fears about global oil supplies have receded after producers pumped more, according to the International Energy Agency.
Oil is trading near a seven-week low on fears the intensifying trade tension will crimp global economic growth and increase financial vulnerability. Supply fears could still return to the fore later this year due to US sanctions on Iran, the IEA said, with some crude buyers already looking elsewhere for supplies before the restrictions take effect in November.
“The economic uncertainty stemming from the escalating trade dispute and the ensuing reduction in risk appetite could have reinforced the impact of bearish supply fundamentals,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.
China will apply 25 per cent duties on American diesel, gasoline, propane and other petroleum products from August 23, according to the nation’s commerce ministry. The latest levies against an additional $16 billion worth of imports from the US match America’s plan to add 25 per cent tariffs on the same value of Chinese goods. Washington is also reviewing 10 per cent duties on a further $200 billion in Chinese products.
The latest list spared US crude, a sign that America has become too big to ignore in the oil market. As recently as June, China was the top foreign buyer of American crude, importing a record 15 million barrels that month. The Asian nation may impose duties later if President Donald Trump doesn’t back down, according to Li Li, a research director at ICIS-China.