Oil markets stabilised on Monday after having lost around 2 percent last Friday as concerns grew over the impact on global growth from an intensifying trade dispute between the United States and China, as well as increased U.S. drilling activity.
Markets were also eyeing the situation in Syria after reports – denied by the Pentagon – that U.S. forces had struck a major air base there.
Brent crude futures were up 39 cents on the day at $ 67.50 a barrel by 0912 GMT. The price approached its lowest in three weeks last week.
U.S. WTI crude futures were up 25 cents at $ 62.31 a barrel.
Oil prices fell about 2 percent on Friday after U.S. President Donald Trump threatened new tariffs on China, reigniting fears of a trade war between the world’s two largest economies that could hurt global growth.
“The market is currently concerned for the escalating China-U.S. trade war tensions. And with good reason since this will be bad for global growth and oil demand growth further down the road,” said Bjarne Schieldrop, head of commodity strategy at SEB. “However, oil market fundamentals are tightening and oil prices looks set to be squeezed higher as long as OPEC+ sticks to its cuts.”
Oil prices are still showing a gain so far this year, thanks to healthy demand and by supply restraint led by the Organization of the Petroleum Exporting Countries, which started in 2017 to rein in oversupply and prop up prices.
With Chinese markets closed last Thursday and Friday, Shanghai crude futures played catch-up on Monday, dropping 0.2 percent to around 401.4 yuan ($ 63.73) per barrel.
“Oil prices have been susceptible to the brewing trade tensions between China and the U.S. … However, fundamental support levels have been demonstrated with OPEC’s suggestion on a production limit extension into 2019,” said Singapore-based Phillip Futures.
In physical oil markets, OPEC’s number two producer Iraq said on Monday that it is keeping prices for its crude supplies in May steady.
West Africa’s crude oil loadings for Asia are set to fall to a five-month low in April, dragged down by a backlog of cargoes outside China and strong Brent prices that hindered new bookings, a Reuters survey of shipping fixtures and traders showed on Friday.
In the United States, drillers added 11 rigs looking for new production in the week to April 6, bringing the total count to 808, the highest level since March 2015, General Electric’s Baker Hughes energy services firm said on Friday.