U.S. West Texas Intermediate crude oil futures are trading slightly lower on Friday, but still holding on to its weekly gains. The price action is being manipulated by escalating tensions between the United States and China against a backdrop of rising coronavirus cases, which could be dragging down fuel demand. At times this week, the market also reacted to the extremely weak U.S. Dollar, which made the dollar-denominated asset more attractive to foreign buyers.
The market took on a bullish tone early in the week when the European Union announced the approval of a massive recovery fund to help Euro Zone economies devastated by the coronavirus. The ensuing rally is responsible for nearly all of the market’s gains this week.
The EU news was so bullish that it encouraged traders to ignore a surprise build in U.S. crude oil inventories and worries that a surge in U.S. coronavirus cases could cap fuel demand. However, ahead of the weekend, it looks as if these factors are weighing on prices, creating a weaker tone that could extend into next week.
The following were the major stories driving the price action this week.
Escalating US-China Tensions Raising Concerns Over Economic Recovery
Helping to weigh on prices on Friday was the announcement that China ordered the United States to close its consulate in the city of Chengdu on Friday, responding to a U.S. demand this week that China close its Houston consulate, as relations between the world’s…