- Oil prices were set for a weekly drop on concerns about oversupply and the ongoing trade conflict between the United States and China.
- China-U.S. tensions could slow global economic growth and drag on oil demand.
- Markets edged up in the previous session and early Friday in the wake of Saudi Arabia moving to allay some fears of oversupply.
Crude prices steadied on Friday and were set for a weekly drop on concerns about oversupply and the ongoing trade conflict between the United States and China, the world’s two biggest oil users.
Brent oil was 9 cents higher at $72.67 a barrel by 8:16 a.m. ET (1216 GMT).
U.S. West Texas Intermediate (WTI) crude for August delivery rose 41 cents to $69.87 a barrel. WTI for September delivery, which becomes the front-month contract on Monday, was down 6 cents at $68.18.
Both benchmarks are on track for their third weekly loss, after big declines on Monday, with Brent set to decline 3.5 percent and WTI to fall by 1.6 percent.
Prices have been dragged down by worries about oversupply as some production returned after outages, while trade tensions between the United States and China stoked fears of damage to their economies and their demand for commodities.
U.S. President Donald Trump said in a CNBC interview he was ready to put tariffs on $500 billion of imported goods from China.
Lower oil demand in the United States and China caused by an economic slowdown from their trade dispute would likely weigh heavily on markets.
The People’s Bank of China (PBOC) on Friday reduced its mid-point for the yuan for the seventh straight trading day to the lowest in a year.
The yuan then retreated to a near 13-month low though it rebounded later in the day.
U.S. President Donald Trump said in an interview on CNBC television that he was concerned that the Chinese currency was “dropping like a rock” and the strong U.S. dollar “puts us at a disadvantage.”
“Risk sentiment is wobbling, which I believe is attributed to PBOC pushing the RMB complex lower via the fix,” said Stephen Innes, head of trading APAC at OANDA brokerage.
“Markets are now nervous, not only about a trade war, but also a currency war.”
The United States accounted for about a fifth of global oil demand in 2017, while China consumed around 13 percent, according to the BP Statistical Review of Energy.
A group of Norwegian drilling rigs workers agreed on Thursday to end a strike that began on July 10, removing a threat to oil and gas production in the region.
“[A]cting as a further brake on upside potential was the conclusion of an oil workers’ strike in Norway,” analyst at London brokerage PVM Oil Associates Stephen Brennock said.
But prices found some support after OPEC’s largest oil producer said it would temper its exports next month.
Saudi Arabia expects its exports to drop by roughly 100,000 barrels per day in August to ensure it does not push more oil into the market than customers need, the kingdom’s OPEC Governor Adeeb Al-Aama said.
“Despite the international oil markets being well balanced in the third quarter, there will still be substantial stock draws due to robust demand and seasonality factors in the second half,” Al-Aama said in a statement.
He also said concerns that Saudi Arabia and its partners are moving to substantially over-supply the market are “without basis”.