Oil headed for the longest run of weekly declines in three years as turbulence in emerging markets and the ongoing trade conflict between the U.S. and China stirred fears that fuel demand may suffer.
Futures added 0.8 percent in New York, and 1.3 percent in London, amid another labor strike at North Sea oil and gas platforms. Yet prices remained lower on the week, poised for their seventh straight loss in New York, as turmoil in Turkey and the continued Chinese-American tariff battle rattled investors. Oil supplies have also appeared more plentiful as U.S. crude inventories expanded by the most since 2017, OPEC raised output in July and Libya recovered some halted production.
Oil has retreated about 13 percent from the three-year high reached at the end of June as concerns about the global economy grow just as the Organization of Petroleum Exporting Countries and its allies revive production.
“Bullish catalysts are in short supply, whereas newfound economic headwinds have given oil bears ample ammunition to keep prices on the back foot,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London.
West Texas Intermediate crude for September delivery traded at $66 a barrel on the New York Mercantile Exchange, up 54 cents, at 8:31 a.m. local time. Total volume traded was about 43 percent below the 100-day average. Prices are down about 11 percent over the last seven weeks and are headed for the longest stretch of weekly losses since August 2015.
Brent for October was at $72.35 a barrel on the London-based ICE Futures Europe exchange, up 92 cents. Prices have fallen about 0.6 percent this week. The global benchmark crude traded at a $6.91 premium to WTI for the same month.
“If the Turkish crisis worsens further, it will stoke concerns over the negative impact on the global economy, which already faces a U.S.-China trade war,” Satoru Yoshida, a commodity analyst at Rakuten Securities Inc. in Tokyo, said by phone. “Prices will also be negatively impacted if U.S. crude inventories continue to rise in the coming weeks as stockpiles tend to drop in August.”
The U.S. escalated a diplomatic row over the release of an American pastor, tipping Turkey’s economy deeper into crisis and raising fears that the tumult will spread to other economies. Broader risk assets also took a beating this week, with Asian equities to emerging market currencies and commodities sliding lower after the Turkish lira’s plunge sent shockwaves through markets.
U.S. President Donald Trump’s trade spat with China, which has been weighing on the market for the past few months, continued to leave investors skittish. While the standoff could ease after they showed willingness to resume negotiations, an earlier breakdown in talks left investors skeptical about the outcome.