Oil set for weekly fall amid supply pressure, tariff uncertainty
LONDON: Oil prices fell on Friday and were set for a weekly decline of over 3% on the back of oversupply concerns and uncertainty around tariff talks between the United States and China.
Brent crude futures were down 82 cents to $65.73 a barrel at 1215 GMT, falling 3.3% over the week.
U.S. West Texas Intermediate crude was down 81 cents to $61.98 a barrel, a decline of 4.2% for the week.
'… Prices are down as concerns over oversupply from OPEC+ persist, while the demand outlook remains uncertain amid ongoing trade tensions. A stronger U.S. dollar has also added pressure to crude prices,' LSEG senior analyst Anh Pham said.
Oil erased earlier gains after a spokesperson from China's foreign ministry said China and the U.S. were not having any consultations or negotiations on tariffs. That contradicted earlier comments by U.S. President Donald Trump, who said on Thursday trade talks between the U.S. and China were underway.
'Traders now view further (crude price) gains as unlikely in the short term due to the continued trade war among top global consumers and speculation that OPEC+ may accelerate production hikes from June,' Saxo Bank analyst Ole Hansen said.
Oil regains ground after 2% drop on potential OPEC+ output increase
China has exempted some U.S. imports from its 125% tariffs and is asking firms to identify critical goods they need levy-free, according to businesses notified, in the clearest sign yet of Beijing's concerns about the trade war's economic fallout.
China hiked its tariffs after Trump announced higher levies on Chinese goods.
Oil prices tumbled earlier this month to four-year lows after the tariffs sparked concern about global demand and a selloff in financial markets.
Worries are growing about excess supply. Several OPEC+ members have suggested the group accelerate oil output increases for a second month in June, Reuters reported earlier this week.
The U.S. and Russia are moving in the right direction to end the war in Ukraine, but some specific elements of a deal remain to be agreed, Russian Foreign Minister Sergey Lavrov said in an interview with CBS News.
A halt to Russia's war in Ukraine and the easing of sanctions could allow more Russian oil to flow to global markets. Russia, a member of the OPEC+ group that includes the Organization of the Petroleum Exporting Countries, is one of the world's biggest oil producers along with the U.S. and Saudi Arabia.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
an hour ago
- Business Recorder
US weekly jobless claims fall, but still elevated
WASHINGTON: The number of Americans filing new applications for unemployment benefits fell last week, but stayed at levels consistent with a further loss of labor market momentum in June. Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 245,000 for the week ended June 14, the Labor Department said on Wednesday. Economists polled by Reuters had forecast 245,000 claims for the latest week. The report was released a day early because of the Juneteenth National Independence Day holiday on Thursday. Claims are in the upper end of their range for this year and could remain there, with non-teaching staff in some states eligible to file for unemployment benefits during the summer school holidays. Though some technical factors accounted for the elevation in claims, there has been a rise in layoffs, with economists saying President Donald Trump's broad tariffs had created a challenging economic environment for businesses. The claims data covered the period during which the government surveyed businesses for the nonfarm payrolls component of June's employment report. US weekly jobless claims rise for second straight week Federal Reserve officials wrapping up their two-day policy meeting on Wednesday are expected to leave the U.S. central bank's its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December, while monitoring the economic fallout from the import duties and the conflict between Israel and Iran. The still historically low layoffs have accounted for much of the labor market stability, with the hiring side of the equation soft amid hesitancy by employers to increase headcount because of the unsettled economic environment. Nonfarm payrolls increased by 139,000 jobs in May, down from 193,000 a year ago. Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, could shed more light on the state of the labor market in June. The so-called continuing claims dropped 6,000 to a seasonally adjusted 1.945 million during the week ending June 7. Recently laid off workers are struggling to find work.
Business Recorder
an hour ago
- Business Recorder
Euro zone bond yields steady before Fed, traders await new catalysts
LONDON: Euro zone bond yields held steady on Wednesday with traders awaiting the outcome of the Federal Reserve meeting later in the day for any hints about further rate cuts, and keeping a wary eye on developments in the Middle East. Germany's 10-year bond yield was down 1 basis point on the day at 2.52%, and its two-year yield was flat at 1.86%. Both were largely in the middle of their recent ranges. The big event for markets around the world on Wednesday is the Fed's rate decision, though the U.S. central bank is widely expected to leave its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December. Traders' focus will be on whether it gives any clues as to whether and when it might begin cutting rates again, though it is also likely to repeat that it can't give much guidance until the impact of U.S. President Donald Trump's import tariffs and fiscal policies become clearer. Even an unlikely change in Fed messaging may do little to nudge European government bonds out of their recent rangebound trading, ING analysts said, as the economic effect of tariffs - inflationary in the U.S., disinflationary in Europe - means Fed and ECB policy is becoming more divergent. Markets are currently pricing one final 25 basis point ECB rate cut this cycle to take its terminal rate to 1.75%, expectations that have been fairly steady in recent weeks, contributing to rangebound trading in government bonds. Euro zone bond yields dip, traders eye Middle East tensions Michiel Tukker, senior rates strategist at ING, said there are two things that could change that. 'First is trade. July 9 is the date where we possibly have trade tariffs kick in if there isn't a trade deal. That'll start becoming a hot topic in the weeks before, and that's the period we're rolling into,' he said. 'Either negotiations turn sour, we go back to 1.5% (terminal rate), or things go quite well and he (Trump) softens his narrative and we maybe go closer to 2%, or at least stay near 1.75%, and the focus will shift back to German fiscal spending.' Germany is embarking on a massive ramp up of borrowing to fund increased spending on infrastructure and defence, likely leading to higher yields in the long term. The other factor in the near term, Tukker said, was economic data, though it would require multiple data points to detect a clear trend given the recent volatile trade policy - 'each data point can tell a different story depending on the sample month.' Investors will also be looking at Wednesday's releases of U.S. Treasury International Capital data that show overseas ownership of Treasuries. There was much speculation earlier this month that foreign investors were looking to reduce their ownership of U.S. government bonds due to erratic U.S. policy. Again, however, one data point will not be enough to provide a clear picture. Other bonds in Europe were largely moving in line with Germany's. Italy's 10-year bond yield, the benchmark for the euro zone periphery was flat at 3.51%.
Business Recorder
2 hours ago
- Business Recorder
Oil steadies as Iran-Israel conflict enters sixth day
LONDON: Oil prices steadied on Wednesday, after a gain of 4% in the previous session, as markets weighed up the chance of supply disruptions from the Iran-Israel conflict and as they ponder a direct U.S. involvement. Brent crude futures gained 16 cents, or 0.2%, to $76.61 a barrel by 1058 GMT. U.S. West Texas Intermediate crude futures rose 17 cents, also 0.2%, to $75.01 per barrel. Both contracts were down over 1% earlier in the session. U.S. President Trump warned on social media on Tuesday that U.S. patience was wearing thin, and called for an 'unconditional surrender' from Iran, an option that Iran's leader Ayatollah Ali Khamenei rejected on Wednesday. While Trump said there was no intention to kill Khamenei 'for now,' his comments suggested a tougher stance toward Iran as he weighs whether to deepen U.S. involvement. A source familiar with internal discussions said one of the options Trump and his team are considering included joining Israel on strikes against Iranian nuclear sites. Oil prices fall more than $2 barrel A direct U.S. involvement threatens to widen the confrontation further, putting energy infrastructure in the region at higher risk of attack, analysts say. 'The biggest fear for the oil market is the shutdown of the Strait of Hormuz,' ING analysts said in a note. 'Almost a third of global seaborne oil trade moves through this chokepoint. A significant disruption to these flows would be enough to push prices to $120 [a barrel],' the bank added. Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude oil. Meanwhile, Iranian ambassador to the United Nations in Geneva Ali Bahreini said on Wednesday that Tehran has conveyed to Washington that it will respond firmly to the United States if it becomes directly involved in Israel's military campaign. Markets are also looking ahead to a second day of U.S. Federal Reserve discussions on Wednesday, in which the central bank is expected to leave its benchmark overnight interest rate in the range of 4.25% to 4.50%. Geopolitics ignite oil prices once again However, the conflict in the Middle East and the risk of slowing global growth could potentially push the Fed to cut rates by 25 basis points in July, sooner than the market's current expectation of September, said Tony Sycamore, market analyst with IG. Lower interest rates generally boost economic growth and demand for oil. Confounding the decision for the Fed, however, is the Middle East conflict's potential creation of a new source of inflation via surging oil prices. U.S. crude stocks fell by 10.1 million barrels in the week ended June 13, market sources told Reuters, citing American Petroleum Institute figures on Tuesday. Official Energy Information Administration data is due later on Wednesday.
