Oil falls for a third week on global trade worries
Saudi Arabia expects to cut August exports by 100,000 bpd but China-US tensions could drag on oil demand
London — Oil prices came under pressure on Friday from US-China trade tensions and were on course for a third straight week of falls.
Brent oil fell 14c to $72.44 a barrel by 10.50am GMT. The expiring US West Texas Intermediate (WTI) crude for August delivery was up 8c at $69.54 a barrel, while the September contract fell 18c to $68.08.
US President Donald Trump said in a CNBC interview that he was ready to put tariffs on $500nm of imported goods from China.
Lower oil demand in the US and China, caused by an economic slowdown from their trade dispute, would likely weigh heavily on markets. On Friday, the People’s Bank of China (PBOC) 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.
Trump also said he was concerned that the Chinese currency was "dropping like a rock" and the strong US dollar "puts us at a disadvantage". The US accounted for about a fifth of global oil demand in 2017, while China consumed about 13%, 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.
"Acting 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 oil cartel 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 (bpd) 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".