By Tsuyoshi Inajima and Grant Smith
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 79 cents to $58.17 a barrel on the ICE Futures Europe Exchange as of 11:48 a.m. in London. The global benchmark crude traded at a $5.03 premium to West Texas Intermediate for the same month, having earlier reached $4.75, the narrowest since July 2018.
WTI for September delivery advanced 76 cents to $53.30 a barrel on the New York Mercantile Exchange. The contract rose $1.45 on Thursday, snapping three days of losses.
See also: Brent Oil’s Premium to WTI Narrows to Smallest Spread in a Year
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.
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