U.S. West Texas Intermediate and international benchmark Brent crude oil futures are trading slightly lower for the week with most of the downside pressure being fueled by escalating tensions between the United States and China over the trade dispute. The price action is being driven by the headlines, which started the week bearish after President Trump promised new tariffs on Chinese imports on Friday.
Crude oil prices traded sideways-to-lower throughout the week as investors shed risky assets while moving money into the safe-haven Japanese Yen and U.S. Treasurys. Demand for risk returned on Thursday after Trump said there was still the possibility of a trade deal being reached, but the “risk-on” scenario disappeared and crude oil prices retreated on Friday after Trump said there’s “absolutely no need to rush” on a trade agreement with China and tariffs will make the United States “much stronger.”
The main concern weighing on crude oil at the end of the week is whether an escalating trade dispute will lead to a U.S. recession, which would hurt U.S. demand for crude oil.
Bullish Factors Remain Intact
Crude oil futures continue to be underpinned primarily by the OPEC-led production cuts and the U.S. sanctions against Venezuela and Iran. This news is providing steady support because it is helping to keep global supply tight.
Giving prices a further boost this week was an unexpected drop in U.S. crude inventories.…