Oil on Friday finished down for the week as positive US jobs news was not enough to erase a plunge triggered by US President Donald Trump’s escalation of a trade war with China.
Futures in New York rebounded 3.2 percent, just partly recovering from a 7.9 percent slump the previous day, the worst one-day sell-off in four years.
Oil began to regain some ground early in the session as the market came to terms with Trump’s threat to impose new tariffs on US$300 billion of Chinese goods.
It then got a boost from a payrolls report that showed the US jobless rate holding near a half-century low, with average hourly earnings that rose more than forecast.
A trade war escalation “is not good for oil, but it’s probably not quite as bad as we saw yesterday,” Confluence Investment Management LLC chief market strategist Bill O’Grady said in St Louis, Missouri. “The reaction was a little over the top, so you’re getting a bit of a recovery today.”
Still, oil declined 1 percent for the week as comments that the US Federal Reserve rate cut might not be followed by another joined with the trade war to boost demand concerns.
Oil last month capped its smallest monthly move since 1991 as it continues to be caught between fears that the global economy might see a slowdown and concerns that crude flows from the Middle East might be disrupted.
“Tariffs and the Fed cut, those are two new data points that weren’t there at the beginning of the week,” US Bank Wealth Management’s Mark Watkins said. “Right now where the global economy is is the No. 1 factor impacting oil.”
West Texas Intermediate oil for delivery next month added US$1.71, or 3.2 percent, to settle at US$55.66 per barrel on the New York Mercantile Exchange.
Brent for October settlement gained US$1.39 to settle at US$61.89 per barrel on the ICE Futures Europe Exchange.
The US’ new import taxes, which Trump said could go “well beyond” 25 percent, would be imposed on a long list of goods expected to include smartphones and laptop computers. They would come atop a 25 percent duty already in place on about US$250 billion in Chinese goods and mean that almost all trade with Beijing would be subject to new levies.
China on Friday pledged “countermeasures.”
Meanwhile, while the Fed cut interest rates this week, the central bank made it clear the cut was not the start of an extended cycle of monetary policy easing to protect the US economy.
In other energy trading, wholesale gasoline rose US$0.03 to US$1.78 per gallon and heating oil climbed US$0.04 to US$1.89 per gallon, while natural gas fell US$0.08 to US$2.12 per 1,000 cubic feet.
Gold rose US$27.70 to US$1,445.60 per ounce and silver rose US$0.10 to US$16.22 per ounce, while copper fell US$0.09 to US$2.57 per pound.
Additional reporting by AP
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