Crude Posts Weekly Drop as Trade Tensions Take Center Stage

Crude posted a fourth straight weekly drop amid concerns over how significantly U.S.-China trade tensions will affect demand.

Futures closed 1.3 percent lower Friday amid low-volume trading. Concerns over global trade continue to weigh on investor sentiment, with U.S. Federal Reserve Chairman Jerome Powell saying earlier this month that trade barriers threaten productivity and wages, while BlackRock Inc. boss Larry Fink warned intensifying tensions could spur a broad market downturn.

We’re seeing “an underlying concern especially about demand growth and worries about what could happen on the global trade issue,” said Gene McGillian, manager of market research at Tradition Energy. “Now, with the uncertainty coming from our president’s administration and his trade policy, part of the demand growth picture is being brought under the spotlight.”

The U.S. benchmark crude is poised for the biggest monthly decline in two years as a trade battle between the U.S. and China is showing no signs of easing, even after President Donald Trump made peace with the European Union. Meanwhile, the U.S. oil rig count rose for the first time in three weeks, Baker Hughes data on Friday showed. Investors are also waiting to see how much OPEC ends up raising production.

Prices rebounded somewhat in the latter part of the week after two Saudi vessels belonging to the Saudi National Shipping Co., each with a capacity of 2 million barrels of oil, were attacked by Yemeni Houthi militia. The Bab el-Mandeb Strait, off the shores of Yemen, Djibouti, and Eritrea, connects the Red Sea with the Arabian Sea and is one of the world’s major waterways for crude oil and other petroleum products.

West Texas Intermediate crude for September delivery slid 92 cents to settle at $68.69 a barrel on the New York Mercantile Exchange. Total volume traded was 40 percent below the 100-day average.

Brent for September settlement slipped 25 cents to end the session at $74.29 a barrel on the London-based ICE Futures Europe exchange. The global benchmark was at a $5.60 premium to WTI.

Talks of the trade war dominated discussions during the Group of 20 nations summit last weekend as Trump prepares to slap tariffs on $500 billion of Chinese goods. Finance ministers and central bankers from the G-20 warned of risks including financial vulnerability as well as structurally weak growth, according to a statement published by the group after their two-day summit in Buenos Aires.

Other oil-market news:

Gasoline futures settled little changed at $2.1619 a gallon. Exxon Mobil Corp. and Chevron Corp. followed divergent paths in reporting second-quarter earnings, and investors took note. They gave a nod of approval to Chevron’s $3 billion stock buyback announcement, and punished Exxon for reporting inferior results with no plans for a payout. Money managers boosted bullish ICE Brent crude oil bets by 14,395 net-long positions to 367,640, weekly ICE Futures Europe data on futures and options show. BP Plc highlighted that it’ll pick up 83,000 acres in the U.S. Permian Basin in its announcement for the $10.5 billion purchase of shale assets from BHP Billiton Ltd.