Getty Images
Oil futures saw mixed trading Friday, finding some support as Saudi Arabia expects to reduce exports in August, easing some concerns of coming oversupply in the market.
Prices, however, remained on track for a third-straight weekly decline on renewed trade-war fears after President Donald Trump said he was ready to impose tariffs on all $505 billion worth of Chinese imports.
August West Texas Intermediate crude CLQ8, +0.73% the U.S. benchmark, shed 9 cents, or 0.1%, to $69.37 a barrel, trading about 2.3% lower for the week after posting declines in the previous two weeks. September WTI crude CLU8, +0.10% which becomes the front-month contract at the session’s end, was down 44 cents, or 0.7%, at $67.80.
The global benchmark, September Brent crude LCOU8, +0.83% traded at $72.80 a barrel, up 22 cents, or 0.3%, on ICE Futures Europe. It was looking at a weekly loss of about 3.3%, also set for a third-weekly fall.
In an interview with CNBC, Trump said he was prepared to impose tariffs on all Chinese goods imported into the U.S. Last year that total was about $505 billion.
“Cautious sentiment prevailed” in the oil market, “highlighting concerns over continuing trade tensions between the U.S. and China, and its potential to impact commodity demand,” said Mihir Kapadia, chief executive officer and founder of Sun Global Investments.
WTI crude rose Thursday, buoyed after a Saudi Arabian official said the kingdom’s crude exports would fall next month in an effort to avoid oversupplying the market. Brent, however, lost ground as a strike by oil workers in Norway concluded.
Despite losses for the week, oil bulls shouldn’t necessarily fret, said Michael Tran, commodity analyst at RBC Capital Markets.
“As far as retracements go, the recent sell off in the oil market is as healthy as they come, particularly since the market has otherwise been on a one-way train higher over the past 12 months,” he said, in a note. “Not only has the selloff been broad commodity based, but much of the recent weakness can be attributed to fairly orderly length liquidation or crystallization of profits rather than a plethora of fresh shorts slamming the market.”
WTI was up roughly 45% over the last 12 months, while Brent was up around 48%.
The fundamental backdrop remains constructive,Tran said, but traders are weary of market-moving political risks “stemming from a tweet, [Strategic Petroleum Reserve] release or trade-war escalation.”
“While we anticipate further upside through the balance of the year and into next, we continue to encourage market watchers to keep an eye out for temporary pockets of physical weakness, particularly in the Atlantic Basin as front Brent spreads flirt with contango,” he said. Contango is a condition in which the futures price trades above the expected future spot price.
Traders also look to the release of weekly U.S. oil rig data from oil-field services firm Baker Hughes BHGE, +2.21% due at 1 p.m. Eastern Time Friday.
In other energy trading, August gasoline RBQ8, +1.49% rose 1% to $2.064 a gallon, with the contract down about 2.1% on the week, while August heating oil HOQ8, +0.91% traded at $2.101 a gallon, up 0.5%—paring its weekly loss to about 1.6%.
August natural gas NGQ18, +0.00% shed 0.2%, to $2.764 per million British thermal units, still poised for a weekly rise of 0.5%.