Oil heads for weekly gain as trade war headlines whipsaw market

SINGAPORE: Oil headed for its first weekly gain this month as trade war news continued to whipsaw the market against the backdrop of rising US stockpiles and a weakening global demand outlook.

Futures added as much as 1.7% in New York after falling 1.4% Thursday. President Donald Trump said he had a call coming soon with his Chinese counterpart Xi Jinping after a pledge from Beijing to retaliate against planned US tariffs.

Earlier in the week, oil surged the most in more than a month after the Trump administration said it would delay levies on some products.

Oil has swung between gains and losses this month as concerns about the impact of the US-China trade war compete with a pledge from Saudi Arabia to stem the price rout.

While tensions with Iran linger, a second weekly surprise increase in American crude inventories compounded demand fears after weak economic data from Germany and China stoked negative sentiment.

“Investors are still hopeful about the possibility of further trade talks and Trump is likely pressured by the tumultuous sessions seen on Wall Street,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc.

There’s upside for oil due to potentially easing trade conflicts and geopolitical risks, he said.

West Texas Intermediate crude for September delivery rose 61 US cents, or 1.1%, to US$55.08 a barrel on the New York Mercantile Exchange as of 7:44 am in London. The contract is up 1.1% this week.

Brent for October settlement added 59 cents, or 1%, to US$58.82 on the ICE Futures Europe Exchange, taking its weekly advance to 0.5%.

The global benchmark traded at a US$3.85 premium to WTI for the same month.

Plans by the United States for 10% tariffs on an additional US$300bil in Chinese imports have taken the two nations off the track of resolving their dispute through negotiation, China’s State Council Tariff Committee said in a statement on Thursday.

Trump told reporters in Morristown, New Jersey, that he has a call scheduled “very soon” with Xi on trade. — Bloomberg