Oil futures finished lower on Friday, with both U.S. and international benchmark crude posting sizable weekly falls as worries about the prospect of rising inventories appeared to overshadow a U.S.-China tariff detente.
“Fears of an expanding supply glut are gaining momentum amid continued uncertainty around U.S.-China trade policy, Brexit, and U.S. sanctions on Iranian oil exports,” said Robbie Fraser, senior commodity analyst at Schneider Electric.
“While the two former items represent more general economic risks, the latter has come into focus this week following the sudden departure of U.S. National Security Adviser John Bolton, who has long been known as a foreign policy hawk,” he said in daily report. Bolton’s “departure raises the chances of more direct U.S.-Iranian dialogue, which could ultimately allow some shuttered Iranian barrels to move back into the global market.”
West Texas Intermediate crude for October delivery CLV19, -0.49% fell 24 cents, or 0.4%, to settle at $54.85 a barrel on the New York Mercantile Exchange—for a roughly 3% weekly decline, according to Dow Jones Market Data, tracking the front-active contract. November Brent crude BRNX19, +0.05% shed 16 cents, or 0.3%, to $60.22 a barrel on the ICE Futures, with prices marking a weekly fall of 2.1%.
“[President Donald] Trump could lift sanctions as a goodwill gesture heading into negotiations, or he could negotiate an end to sanctions during a grand summit with the Iranians,” wrote Robert Yawger, director of energy at Mizuho USA, in a daily research report. “Either way, the timing could not come at a much worse time than now as the price of crude oil hangs in the balance.”
The Joint Ministerial Monitoring Committee, or JMMC, which monitors compliance with output reductions set by an OPEC+ agreement that began at the start of this year, on Thursday “underscored the critical need for continued commitment” to the pledged production cuts. It said compliance with the cuts stood at 136% in August.
Meanwhile, signs of cooling animosities between Beijing and Washington, representing the largest economies in the world and big consumers of crude, have been a focus for oil traders because that conflict has threatened to hurting the global economy and damage demand for crude.
China made further concessions to the U.S. on international trade on Friday, adding agricultural products like soybeans and pork to the list of imports exempted tariffs, as prospects for at least an interim deal to resolve the two year old trade dispute improve.
However, U.S. rig-count data from Baker Hughes implied a slowdown in drilling rig activity. The data revealed that the number of active U.S. rigs drilling for oil declined by five to 733 this week. That marked a fourth straight weekly decline.
Rounding out action on Nymex, October gasoline RBV19, -0.32% ended little changed at $1.5531 a gallon, with prices down 1.3% for the week. October heating oil RBV19, -0.32% fell 0.4% to $1.8778 a gallon, for a weekly loss of 1.2%.
Natural-gas futures saw their October contract NGV19, +1.83% climb by 1.6% to $2.614 per million British thermal units, settling up 4.7% for the week. The Energy Information Administration on Thursday reported a smaller-than-expected weekly rise in U.S. supplies of the fuel.
Supply increases over the next few weeks are “likely to be challenged to rise much above normal, as production levels stall amid pipeline maintenance, while demand from power generation and exports holds strong,” said Christin Redmond, commodity analyst at Schneider Electric.