After posting an impressive rally on Monday through Wednesday, U.S. West Texas Intermediate crude oil futures are trading lower on Friday, putting the market in a position to finish lower for the week.
The primary catalyst behind the price action this week was U.S.-China trade relations. Optimism over the progress of the negotiations drove prices higher early in the week, but uncertainty over the timing of the signing of a trade deal encouraged long investors to book profits and trim positions late in the week.
Concerns over Trade Deal
On Thursday, China and the U.S. announced they would roll back tariffs. This temporarily raised the chances of a near-term deal, sending crude oil prices higher. However, that move didn’t last.
Furthermore, the decision to roll back tariffs is causing some problems with Trump administration hardliners who fear the U.S. may lose its leverage against China if it continues to make concessions.
WTI and Brent crude oil sold-off sharply on Wednesday after a report that a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim deal could be delayed until December as talks continue over terms and venue, a senior official of the Trump administration told Reuters on Wednesday.
It was still possible the “phase one” agreement aimed at ending a damaging trade war would not be reached, but a deal was more likely than not, the official said on condition of anonymity.