Oil is poised for a second weekly loss as investors weigh the deteriorating U.S.-China trade dispute against the latest steps from Saudi Arabia to stabilize the market.
Brent crude rose 1.1% in London, but is down 6% for the week. The deepening spat between Beijing and Washington and a surprise gain in U.S. stockpiles helped drive prices to a seven-month low on Wednesday.
The International Energy Agency on Friday called the demand outlook “fragile.” Saudi Arabia has responded to the rout with a plan to limit output and exports in September.
Brent has dropped into a bear market as growing fears that the trade spat will expand into a currency war overshadow the risk of supply disruptions in the Middle East. The IEA in its monthly report trimmed forecasts for oil-demand growth this year and next, and warned that it may lower the estimates further as the U.S.-China conflict drags on.
“The recent escalation of U.S. trade measures against China has fueled risk aversion in global markets, and oil has not been immune to the turmoil -- despite supportive supply-side fundamentals,” said Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA.
Brent for October settlement rose 64 cents to $58.02 a barrel on the ICE Futures Europe Exchange as of 8:46 a.m. in New York. The global benchmark crude traded at a $4.90 premium to West Texas Intermediate for the same month, having reached $4.75 on Thursday, the narrowest since July 2018.
WTI for September delivery advanced 64 cents to $53.18 a barrel on the New York Mercantile Exchange. The contract rose $1.45 on Thursday, snapping three days of losses.
Saudi Arabia, the top producer in the Organization of Petroleum Exporting Countries, plans to keep oil exports below 7 million barrels a day next month as it allocates less crude than customers demand, according to officials from the kingdom. State-run Saudi Aramco will provide customers across all regions with 700,000 barrels a day less than they requested, the officials said, asking not to be identified because the information isn’t public.
Amid oil’s slide, United Arab Emirates Energy Minister Suhail Al-Mazrouei insisted market fundamentals are good and prices are undergoing a “temporary overreaction” driven by speculation. “I am confident that OPEC+ will continue” its strong compliance with agreed production levels, he said on Twitter.
© 2019 Bloomberg L.P.