Investing.com - Oil prices snapped their two-day rally on Friday on U.S.-China angst, but still managed to finish the week higher on suggestions that OPEC+ production cuts will continue until June.
U.S. West Texas Intermediate and U.K. Brent crude settled down about 1% on the day and steady on the week.
The disparity came as traders tried to balance out China’s latest dare against U.S. tariffs with Russia’s assurance that it had its ally OPEC’s back on output reductions. Some even noted that the futures market in crude seemed to be aligning with higher physical prices -- a rare occurrence indeed.
WTI settled down 81 cents, or 1.4%, at $57.77 per barrel.
Brent, the global benchmark for crude, closed the New York session down 58 cents, or 0.9%, at $63.39.
For the week, both WTI and Brent rose less than a dime each. Their yearly performance was much better, of course, with gains of 28% and 18%, respectively.
“What a week. People asked me why crude was up $3 in two days and I replied with a question… why was it down over 3 days?” ICAP (LON:NXGN) energy broker Scott Shelton said in his daily note.
Friday’s market slide came after China’s President Xi Jinping said Beijing wanted a deal with the United States, but will fight back if necessary against his counterpart Trump’s threat that Chinese imports will face more duties from Dec 15 if a phase one agreement isn’t inked by then.
“We have been working actively to try not to have a trade war. We did not initiate this trade war, and this is not something we want,” Xi said in remarks to journalists pooled by the South China Morning Post.
But he added that his administration also intended to “restore China’s dignity and status” and ensure the history of its being invaded and ruled by colonial powers once would “never be repeated again."
The two-month highs in oil prices earlier this week came on a Reuters report that OPEC and Russia were likely to extend existing production cuts by another three months to mid-2020 when they meet over Dec. 5-6. Russian President Vladimir Putin himself lent credence to the speculation by saying OPEC will have his country’s support — despite Moscow's persistently falling short of its past promises to the cartel.
OPEC sources quoted by Reuters this week instead turned their attention on the need for stricter deal compliance on cuts from the likes of Iraq and Nigeria. That seems to be on top of the must-do list of OPEC’s de-facto leader Saudi Arabia, which detests the idea of having to carry most of the burden of the cartel’s pledged cuts that will weigh on the bottom line of its soon-to-listed Saudi Aramco company.