Oil put in a mixed performance Friday, with the U.S. benchmark edging lower, with worries over an escalating trade fight between Washington and Beijing limiting upside.
“The escalation in the trade war has put a return in global growth worries, which would translate to softer crude demand,” said Edward Moya, senior market analyst at Oanda.
However, “optimism is still greater for a deal to get done soon, than for talks to fall apart, so the trade story could shortly become a tailwind for crude,” he said. Also, “Chinese goods that left ports before May 10 are not subject to the increase, thus providing a small, roughly two-week window that could provide added incentive for a deal to be finalized.”
West Texas Intermediate crude for June delivery CLM9, -0.02% fell 4 cents, or 0.1%, to settle at $61.66 a barrel on Friday. The contract fell 0.5% for the week, marking its third straight weekly decline.
Global benchmark July Brent crude LCON9, +0.50% rose 23 cents, or 0.3%, to end at $70.62 a barrel on ICE Futures Europe. That wasn’t enough to turn Brent higher for the week, ending 0.3% lower.
The Trump administration early Friday increased tariffs on $200 billion in Chinese imports, and Beijing has vowed to retaliate. U.S. and Chinese officials continued negotiations Friday in Washington but didn’t produce a deal.
Concerns over the U.S.-China trade dispute have offset the price-supportive weekly decline in U.S. crude inventories reported Wednesday. However, traders continued to watch growing tensions between the U.S. and Iran, which could disrupt Middle East output and drive oil prices higher.
“While investors try to read the potential effects of US tariffs on imports and their impact of economic growth, the attention on the Iranian situation and the 60 days ultimatum also remains high,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades, in a Friday research note.
Hostilities between Tehran and Washington have increased as the oil-producing country has said it would stop complying with some of its commitments under the 2015 nuclear deal, moving closer to a breakdown of the landmark accord.
“Oil has been unable, so far, to exit the lateral trading range that has compressed volatility in the last few days, holding prices between $60 and $62.8. A clear break out of this second level would open space for further recoveries, with a potential target of $64,” said De Casa.
Back on Nymex, June gasoline RBM9, +0.79% added 0.7% to settle at $3.74 cents a gallon, leaving it with a 1.9% weekly loss. June heating oil HOM9, +0.60% rose 0.3% to end at $2.0504 a gallon, off 1% for the week.
June natural gas NGM19, +1.12% closed at $2.619 per million British thermal units, up 0.9% on Friday for a weekly rise of 2%.
Natural-gas prices “continue to struggle to maintain support amid strong supply and tepid demand,” said Christin Redmond, global commodity analyst at Schneider Electric.
The EIA on Thursday reported a U.S. storage build of 85 billion cubic feet for the week ended May 3. That’s “a number 18% greater than the five-year average for the same week, but 31% less than the previous week’s injection,” she said.
