Oil Prices Rebound Slightly After Weekly Decline Amid Tariff Concerns
Oil prices posted their third consecutive weekly decline, pressured by concerns over slowing demand due to escalating tariffs between the US and China.
West Texas Intermediate (WTI) edged up 0.6% to settle at $71 a barrel on Friday, indicating potential overselling according to the nine-day relative strength index. However, crude ended the week down 2.1% as US tariffs on Chinese imports and China's planned retaliatory measures threaten global economic growth.
The Asian refining sector faces additional bearish pressure as operating rates have plunged to levels not seen since the start of the COVID-19 pandemic. Previous US sanctions on Russia reduced a key source of China's crude supply, while demand also appears to be faltering.
Trade tensions and the potential for their expansion have sparked concerns over reduced crude demand and a potential surplus later in the year. Despite the new US administration's sanctions on Iran, they are unlikely to significantly impact the existing supply disruptions.
"Oil prices remain under pressure but show signs of support around current levels," said Arne Lohmann Rasmussen, chief analyst at A/S Global Risk Management. The market anticipates that US tariffs on Chinese goods could exacerbate the economic slowdown."
The crude market continues to adjust to volatility sparked by the Trump administration's policies. Tariffs on Canada and Mexico, the US's top two foreign crude suppliers, were briefly scheduled to take effect this week before being delayed. The president has also influenced futures with statements indicating his desire to lower oil prices.
Additionally, Europe is experiencing pockets of weakness. Crude grades used in futures benchmarks are trading at multi-month lows due to plant closures in the region. Timespreads, which gauge market health, have also declined this week.