Oil prices sink but on track for third weekly rise on trade hopes

Oil fell on Friday, but prices were set for a third straight weekly gain amid the easing of U.S.-Chinese trade tensions, which has boosted business confidence and the outlook for global economic growth. Brent was down 55 cents, or 0.8%, at $65.99 a barrel by 1:33 p.m. EST (1833 GMT), but marking a weekly rise of around 1%. U.S. West Texas Intermediate crude was down 92 cents, or 1.5%, at $60.26 per barrel, but has gained about 0.3% on the week. Progress in the trade dispute between the world’s two biggest oil consumers has raised expectations of higher energy demand next year.

China on Thursday announced a list of import tariff exemptions for six oil and chemical products from the United States, days after Washington and Beijing said an interim trade deal is set to be signed in January. Advancement of the U.S.-Mexico-Canada Agreement (USMCA), which is set to replace the North American Free Trade Agreement (NAFTA), has also boosted oil this week. The agreement was passed by the U.S. House of Representatives on Thursday. “The oil market in general has been supported from good news on the trade front,” said Andy Lipow, president of Lipow Oil Associates in Houston. Some selling ahead of the Christmas and New Year’s Day holidays was pushing prices lower, said Phil Flynn, an analyst at Price Futures Group in Chicago. “We’ve had a pretty good run the last couple of days, and I think the bulls are nervous about carrying positions into the holiday,” Flynn said. A rise in the U.S. oil rig count, an indicator of future supply from the world’s largest producer, also put pressure on prices. U.S. energy firms added the most oil rigs this week since February 2018, even though producers have been reducing spending on new drilling, energy services firm Baker Hughes Co said in its report on Friday.

Companies added 18 oil rigs in the week to Dec. 20, bringing the total count to 685, the most since early November, Baker Hughes said. U.S. economic growth nudged up in the third quarter, the government confirmed on Friday, and there are signs the U.S. economy more or less maintained the moderate pace of expansion as the year ended, supported by a strong labour market.

The end of 2019 offered much noise but little direction, and prices were treading water on average, Julius Baer analyst Carsten Menke said. “Looking forward into 2020, commodities as an asset class should continue to trade range-bound for most of the year,” Menke said. Meanwhile, France’s CGT oil sector workers union plans to step up a nationwide strike but will leave the decision over whether to halt production at refineries for workers to decide early next week, a CGT union official said.