Oil is poised for a second weekly loss as investors weigh the deteriorating U.S.-China trade dispute against the latest steps from Saudi Arabia to stabilize the market.
Futures were steady in New York, down more than 5% for the week. A deepening spat between Beijing and Washington and a surprise gain in U.S. crude stockpiles helped to drive prices to the lowest level in almost seven months on Wednesday.
The U.S. benchmark has lost about 10% this month, while Brent has dropped into a bear market as growing fears the trade spat will expand into a currency war overshadowed the risk of supply disruptions in the Middle East.
Saudi Arabia plans to keep oil exports below 7 million barrels a day next month as the top producer in the Organization of Petroleum Exporting Countries allocates less crude than customers demand, according to the kingdom’s officials.
“No matter how hard Saudi Arabia tries, the kingdom alone cannot support the framework of OPEC+ cuts,” said Satoru Yoshida, a commodities analyst at Rakuten Securities Inc. in Tokyo. “You need both deeper cuts and the settlement of the U.S.-China conflict” to prop up crude prices, he said.
West Texas Intermediate oil for September delivery added 5 cents to $52.59 a barrel on the New York Mercantile Exchange as of 2:13 p.m. in Singapore. The contract rose $1.45 to $52.54 on Thursday, snapping three days of losses and rebounding from the lowest level since January.
Brent for October settlement rose 5 cents to $57.43 on the ICE Futures Europe Exchange. The contract is down 7.2% this week, set for a second weekly loss. The global benchmark traded at a $4.90 premium to WTI for the same month.
State-run Saudi Aramco will curb customer allocations across all regions by a total of 700,000 barrels a day next month, the officials said, asking not to be identified because the information isn’t public.
For North American buyers, the kingdom will send about 300,000 barrels a day less than they nominated for oil scheduled to load in September, according to a person familiar with the matter.
Oil market fundamentals are good and prices are undergoing a “temporary over-reaction,” driven by speculation, Suhail Al-Mazrouei, the energy minister for the United Arab Emirates, said on Twitter. “I am confident that OPEC+ will continue” its strong compliance with agreed production levels, he said.