Oil falls as specter of U.S.-China trade war haunts market
Brent crude was down 17 cents, or 0.3%, at $60.21 a barrel by 0053 GMT, while U.S. West Texas Intermediate (WTI) was off by 14 cents, or 0.3%, at $54.95.
Brent has traded in a range of nearly $5 this week and is heading for the first weekly loss in five. U.S. crude has traded similarly and is heading for its first loss in three weeks.
Gloom over the dispute between Washington and Beijing left investors shrugging off a commitment from Organization of the Petroleum Exporting Countries (OPEC) producers to trim output, with more signs emerging that global economic growth is being stunted by the trade row.
“Again it is a battle between the forces of OPEC and those of slowing global growth and thus demand,” said Greg McKenna, strategist at McKenna Macro.
The hit to market confidence came as economists in a Reuters poll predicted the U.S.-China trade spat will worsen or at best stay the same over the coming year.
Nearly 80% of more than 60 economists said U.S.-China trade relations would either worsen or stay the same by the end of next year. The median probability of a U.S. recession in the next two years held at a high of 45%, and the chance of one in the next 12 months held at 30%.
Those prospects were enough to overshadow OPEC’s agreement on Thursday to trim oil output by asking over-producing members Iraq and Nigeria to bring production in line with targets. The group is striving to prevent a glut amid soaring U.S. production and the slowing global economy.
A market-monitoring committee formed by OPEC and allied producers, a grouping known as OPEC+, met on Thursday in Abu Dhabi ahead of policy discussions set for Vienna in December.
OPEC+ has over-complied on average with its agreed cut of 1.2 million barrels per day (bpd) as Iranian and Venezuelan exports collapsed due to sanctions. But some members, such as Iraq and Nigeria, have been producing above their quota.