- Oil Prices in Weekly Loss Over Trade Row
Crude prices edged higher on Friday, but retreated from session highs and were headed for another weekly decline on worries that oversupply would weigh on the United States market while trade disputes and slowing global economic growth would slow demand for oil.
The US crude was on track for its seventh consecutive weekly decline and global benchmark Brent was set to drop for a third week, as reported by Reuters.
“One of the biggest concerns out there is that China’s demand numbers are coming down if China’s GDP growth is slowing,” said Tariq Zahir, managing member at Tyche Capital in New York.
Brent crude oil futures LCOc1 were up nine cents at $71.52 a barrel by 1:04 pm EDT (1604 GMT), after rising over $1 to hit a session high of $72.44 a barrel.
The US West Texas Intermediate crude futures CLc1 rose 13 cents to $65.59, after touching a session high of $66.39.
For the week, Brent was heading for a 1.8 per cent loss, and the US crude on track to end three per cent lower.
Friday’s pull back from session highs came on mounting worries that the US crude inventories would post another consecutive gain, said Bob Yawger, director of futures at Mizuho Americas.
The US government data this week showed a large build up in crude inventories C-OUT-T-EIA, with production C-OUT-T-EIA also increasing.
“Investors remain cautious as Wednesday’s surprise gain in US stockpiles remained fresh in their minds,” ANZ bank said on Friday.
The US oil rigs were unchanged in the week at 869 rigs, according to a weekly report from energy company Baker Hughes on Friday. Changes in the number of drilling rigs can indicate future production trends.
Another major drag on prices was the darkening economic outlook on trade tensions between the United States and China, and weakening emerging market currencies that are weighing on growth and fuel consumption, traders and analysts said.
The US investment bank Jefferies said there was a “lack of demand” for crude oil and refined products from emerging markets, while Singapore’s DBS bank said that Chinese data showed a “steady decline” in activity and that “the economy is facing added headwinds due to rising trade tensions”.
Japan’s MUFG Bank, meanwhile, said that the weakening Turkish lira will constrain further growth in gasoline and diesel demand this year.
“Although emerging market contagion and China slowdown fears seem somewhat overstated, neither fundamental nor sentiment should provide support for higher commodity prices,” Julius Baer Head of Macro and Commodity Research Norbert Rücker said.
Furthermore, just as demand seems to be slowing, supply looks to be rising, increasing the drag on markets.
