Daniel Acker/Bloomberg
Oil futures lost ground Friday and were on track for weekly declines as a trade dispute between the Washington and Beijing ratcheted higher following President Donald Trump’s call to add to the amount of tariffs on imports out of China.
On the New York Mercantile Exchange, West Texas Intermediate futures for May delivery CLK8, -2.00% the U.S. benchmark, fell 30 cents, or 0.5%, to $63.24 a barrel, while June Brent crude LCOM8, -1.45% the global benchmark, was flat at $68.33 a barrel on London’s Intercontinental Exchange.
The White House said in a statement after the market close Thursday that Trump has asked the U.S. Trade Representative to consider an extra $100 billion in Chinese goods to face tariffs and to identify the products that could be targeted, escalating protectionist trade tensions that market participants fear could disrupt global economies and potentially impact crude demand, even if on a short-term basis.
Oil has pared or erased knee-jerk losses, with Brent more than $1 above its reaction low set to the initial escalation of trade tensions at midweek.
“It seems that there is also some habituation effect here, or perhaps it is not seriously expected that the worst will come to the worst. All the same, the risk should not be underestimated,” wrote commodity analysts led by Eugen Weinberg at Commerzbank.
“After all, the U.S. and China are the world’s largest oil consumer and oil importer countries. If the trade conflict escalates and slows oil demand in the U.S. and China, this would have an impact on the market balance that could hardly be ignored,” they wrote.
Crude prices had fallen to two-week lows until rebounding modestly on Thursday as trade tensions between the world’s largest economies appeared to moderate somewhat.
However, energy traders have been heartened by price-supportive supply reports, with the U.S. Energy Information Administration indicating on Wednesday that U.S. crude stockpiles fell by 4.6 million barrels last week—the biggest weekly decline since January, beating analysts’ forecasts.
Oil investors continue to focus on fundamentals, which will most directly inform how the commodity trades. Those factors include rising tensions in the Middle East between major oil producers Iran and Saudi Arabia, along with expectations the U.S. may withdraw from the international nuclear deal with Iran and reinstate sanctions.
Looking ahead, market participants also are anticipating weekly data from Baker Hughes at 1 p.m. Eastern Time on the number of rigs drilling for oil in the U.S., a measure of activity in the sector.
Meanwhile, March jobs data came in weaker than expected, showing the U.S. economy added just 103,000 jobs versus forecasts for a rise of 170,000—though the data showed the labor market remains the tightest in nearly two decades.
Read: Weak jobs report gives Fed more time to decide whether to shoot for four hikes this year
Among other energy contracts, Nymex reformulated gasoline blendstock RBK8, -1.20% —the benchmark gasoline contract—shed a penny to $1.971 a gallon, while May heating HOK8, -0.76% was unchanged at $1.9765 a gallon.
May natural gas NGK18, +0.90% meanwhile, rose by 2.7 cents, or 1%, to $2.702 per million British thermal units. EIA said working gas in storage fell 29 billion cubic feet last week.
“ Natural as is up well over 1.0% this morning as another winter storm threatens to batter the East Coast this weekend,” said Robert Yawger, director of energy futures at Mizuho Securities USA. Indeed, weather reports are forecasting three separate snow storms set to hit the Midwest and East in coming days, according to The Weather Channel.