Oil headed for the first weekly decline this year after US President Donald Trump raised the prospect of trade wars, and said he would ask Saudi Arabia and OPEC to lower prices in the first few days of his new administration.
Brent traded near US$78 a barrel and is down more than 3 percent this week, while West Texas Intermediate was above US$74.
Trump’s first week in the White House began with tariff threats on Canada, Mexico and China, followed by a pledge that he would ask the producer group to “bring down the cost of oil.”
Photo: Reuters
On Thursday, Trump said that he would rather not have to use tariffs on China.
He made the remarks during an interview on Fox News, adding that he would also reach out to North Korean leader Kim Jong-un.
That has helped put futures on track for the biggest weekly loss since November last year, although prices are still higher this year after a cold northern hemisphere winter drove up heating demand and US sanctions on Russia upended crude markets.
Trump has threatened more penalties on Moscow if Russian President Vladimir Putin does not “make a deal” to end the war in Ukraine.
The broad US sanctions that were implemented in the final days of the administration of former US president Joe Biden tightened the flow of Russian oil and increased prices of other physical barrels from the Middle East.
That has led to some Asian refiners lowering crude processing rates or considering cuts.
“It will be no easy task to convince OPEC to increase output,” said Warren Patterson, the head of commodities strategy for ING Groep NV in Singapore. “Furthermore, lower oil prices would also be an obstacle to significantly increasing US oil production.”
One of Trump’s executive orders this week was to declare a national energy emergency to help boost domestic production.
Meanwhile, US crude stockpiles declined for a ninth consecutive week, the US Energy Information Administration said in a report on Thursday.
Inventories were lower than the five-year seasonal average for this time of the year and went against an earlier industry report that estimated a build.
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