Oil on Friday fell for the third straight week as investors weighed the potential damage to global growth after an inconclusive end to the latest US-China trade talks.
Futures in New York were little-changed for the day, but finished the week off by 0.5 percent.
The world’s two biggest economies wrapped up high-level talks in Washington without a deal, but they avoided a complete breakdown in negotiations, despite US President Donald Trump’s decision to raise tariffs on US$200 billion of Chinese exports.
With Trump saying that he saw no need to rush a deal, investors face “a number of questions in terms of the economic outlook and therefore in terms of oil and demand,” BNP Paribas SA head commodity markets strategist Harry Tchilinguirian said in London by telephone.
“As you have an escalation of tension, you also have an element of uncertainty, which leads to people taking off risks,” he said.
Despite a week of trade brinkmanship, signs of tighter global supplies have kept prices from an all-out collapse.
Tensions continued to rise this week between the US and Iran, with Washington dispatching an aircraft carrier group to the Middle East, and the US threatened more sanctions against fellow OPEC member Venezuela amid political strife there.
In Norway, Equinor ASA said that its Oseberg Field Center has been shut since Wednesday afternoon, affecting fields with about 6 percent of the nation’s output.
West Texas Intermediate crude for delivery next month fell US$0.04 to US$61.66 per barrel on the New York Mercantile Exchange at the close of trading.
July Brent crude on Friday jumped to a US$1 per barrel premium to the August contract — a situation known as backwardation — suggesting supply fears remain a dominant force.
Brent for July settlement rose US$0.23, or 0.3 percent, to US$70.62 per barrel on the London-based ICE Futures Europe exchange.
Also on the supply side, contaminated Russian shipments and leaks in a key Nigerian pipeline have amplified the restrictions on Iran and Venezuela’s exports. It remained uncertain to what extent Saudi Arabia would increase its production to fill the gap.
Brent’s three-month oil time-spread is reflecting the shortages, with the widest backwardation in almost five years.
“Prices are finding fundamental support from the tightening supply, as also indicated by the pronounced state of backwardation in the Brent forward curve,” Commerzbank AG analysts including Carsten Fritsch wrote in a report.
Wholesale gasoline added 0.7 percent to US$1.99 per gallon and heating oil gained 0.3 percent to US$2.05 per gallon, while natural gas picked up 0.9 percent to US$2.62 per 1,000 cubic feet.
Gold rose 0.2 percent to US$1,287.40 per ounce and silver added 0.1 percent to US$14.79 per ounce, while copper inched 0.1 percent higher to US$2.77 per pound.
Additional reporting by AP
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