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LONDON: Oil prices fell on Friday as traders squared positions ahead of an OPEC+ meeting and amid some caution about a potential de-escalation of the trade dispute between China and the US.
Brent crude futures were down 56 cents, or 0.9 percent, to $61.57 a barrel at 3:02 p.m. Saudi time, while US West Texas Intermediate crude futures fell 61 cents, or 1 percent, to $58.63 a barrel.
For the week, Brent and WTI were on track for 7 percent drops, the biggest weekly declines in a month.
China’s Commerce Ministry said on Friday that Beijing was “evaluating” a proposal from Washington to hold talks aimed at addressing US President Donald Trump’s sweeping tariffs, signalling a possible easing of the trade tensions that have rattled global markets.
“There is some optimism when it comes to US-China relations but the signs are only very tentative,” said Harry Tchilinguirian, group head of research at Onyx Capital Group. “It’s still very fluid, a one step forward, two steps back situation when it comes to tariffs.”
Concerns that the broader trade war could push the global economy into a recession and crimp oil demand, just as the OPEC+ group is preparing to raise output, have weighed heavily on oil prices in recent weeks.
Complicating any talks was a threat from Trump to impose secondary sanctions on buyers of Iranian oil. China is the world’s largest importer of Iran’s crude.
Trump’s comments followed a postponement of US talks with Iran over its nuclear program. He had previously restored a “maximum pressure” campaign against Iran, which included efforts to drive the country’s oil exports to zero to help prevent Tehran from developing a nuclear weapon.
Oil prices gained late in Thursday’s session to settle nearly 2 percent higher on Trump’s remarks, erasing some of the losses recorded earlier in the week on expectations of more OPEC+ supply coming to the market.
“With non-OPEC+ supply rising robustly and global demand growth facing structural decline, we see no natural re-entry point for these barrels and, ultimately, the group will likely have to endure some price pain no matter when it unwinds its cuts,” Fitch’s BMI research unit said in a note.