Oil set for weekly drop as Trump issues new trade threats
CALGARY (Bloomberg) -- Oil headed for a third weekly loss amid concern escalating trade rows would undercut energy demand, undermining reassurances from Saudi Arabia that it won’t flood global crude markets.
Futures pared gains in New York on Friday as President Donald Trump said that he’s “ready to go” with tariffs on $500 billion of Chinese goods. Crude had risen earlier after Saudi Arabia, under pressure from Trump to lower prices by pumping more, said they will keep exports steady this month and reduce them by 100,000 bpd in August.
“The latest from Trump about maybe increasing the tariffs on imports from China” is raising concern, said James Williams, president of London, Arkansas-based energy researcher WTRG Economics. “If not weaker economy here, than a weaker economy in China, that’s a big fear.”
Crude has retreated about 6% this month as the escalating trade war between the U.S. and China rattled global financial markets. On Friday, Trump tweeted that China and the European Union are “manipulating” their currencies lower while the U.S. is raising rates and the dollar gets stronger.
The drop in the price of oil has been aided by Libya restoring halted output and the U.S. signaling it may show some flexibility in sanctions on Iranian oil. That’s prompted concern the extra crude promised by Saudi Arabia might not yet be needed.
West Texas Intermediate crude for August delivery, which expires Friday, rose 37 cents to $69.54/bbl at 11:33 a.m. local time on the New York Mercantile Exchange. It has lost 2% this week. Total volume traded was about 29% below the 100-day average. The more-active September contract slipped 0.2% to $68.11.
The U.S. oil benchmark closed above its 50-day moving average on Thursday after slipping below that level earlier this week.
Brent for September settlement rose 22 cents to $72.80 on the London-based ICE Futures Europe exchange, after dropping 32 cents on Thursday. The contract is down 3.4% this week. The global benchmark traded at a $4.75 premium to WTI for the same month.
Saudi Arabia’s pledge to keep its crude exports steady from June to July, and reduce it in August, follows an agreement last month between OPEC and its partners including Russia to boost production by 1 MMbpd. The kingdom’s assurance clashes with signals it gave out shortly after last month’s OPEC meeting, when people briefed on its output policy said it planned record production of 10.8 MMbpd.
