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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.
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