Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil Prices Bounce After Tariff Threats Cause Worst Slide in 3 Years

Published 2019-08-02, 06:51 a/m
Updated 2019-08-02, 07:17 a/m
© Reuters.

© Reuters.

Investing.com - Oil prices rebounded on Friday after its worst selloff in three years.

U.S. President Donald Trump’s pledge to place a 10% tariff on a further $300 billion in Chinese goods sent crude tumbling 7% a day earlier.

New York-traded West Texas Intermediate crude futures gained $1.22, or 2.3%, to $55.17 a barrel by 6:46 AM ET (10:46 GMT), while Brent crude futures, the benchmark for oil prices outside the U.S., rose $1.58, or 2.6%, to $62.08.

A worsening U.S.-China trade dispute increases the risk of a global economic slowdown that could negatively impact demand for oil, particularly in as much as the conflict is between the world's two largest oil consumers.

Fallout from the conflict included data out Thursday that showed U.S. manufacturing activity slipping to its lowest in nearly three years last month, while construction spending fell in June as investment in private construction projects tumbled to its lowest level in one-and-a-half years.

Although ING commodity strategists Warren Patterson and Wenyu Yao recognized the bearish implications of escalating trade tensions, they said that they remained bullish.

“We continue to hold a constructive view on the back of OPEC+ supply cuts and Iranian sanctions, though clearly sentiment is bearish as a result of the broader macro and trade concerns,” they said in a note.

These strategists pointed to Bloomberg estimates for OPEC production in July which showed the lowest monthly output from the cartel since May 2014.

“These numbers continue to show that OPEC remains committed to bringing the market back to balance, with Saudi Arabia leading the way,” they said.

Still ahead in the session, Baker Hughes’ weekly rig count data are due.

Last week’s data showed U.S. energy firms reduced the number of oil rigs operating for a fourth week in a row to the lowest level since February 2018, against a backdrop of slowing growth in U.S. output.

In other energy trading, gasoline futures advanced 1.6% to $1.7775 a gallon by 6:48 AM ET (10:48 GMT), while heating oil gained 1.8% to $1.8869 a gallon.

Lastly, natural gas futures traded down 1.8% to $2.162 per million British thermal unit.

-- Reuters contributed to this report.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.