Oil Futures Higher After Selloff
WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange bounced back in early Friday trade, recovering partially from this week's selloff, though concerns over lower fuel demand and oversupply limit the upside.
Near 9:00 a.m. EDT, July NYMEX West Texas Intermediate rose 77cts to $58.68 bbl while the ICE July Brent contract gained nearly $1 to $68.70 bbl.
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NYMEX June RBOB futures climbed 1.16cts to $1.9249 gallon and the June ULSD contract rose 1.37cts to $1.9761 gallon.
WTI and Brent gained nearly 1% in overnight trade ahead of the long Memorial Day holiday weekend as markets attempt to recover losses from Thursday's crash. Bearish government supply data joined with concerns over a prolonged U.S./China trade war sent oil futures and equities lower this week. China's Commerce Ministry said on Thursday the country would not resume trade talks with the United States until the White House "adjusts its wrong actions, ratcheting up the rhetoric in the ongoing trade dispute between the worlds' two largest economies.
Investors started to price in a long U.S./China trade war as fresh reports signal weakness in the U.S. and global economy. The Organization of Economic Cooperation and Development revised lower this week its global economic growth to a 3-year low, while substantially downgrading global trade flow due to U.S./China tariff hikes. OECD also projected gross domestic product growth by the U.S. and China could be cut by 0.2% to 0.3% by 2021 and 2022 if the two countries are unable to resolve their trade dispute and maintain tariffs.
The escalation in the trade war comes one day after the Energy Information Administration reported an unexpected 4.7 million bbl build in U.S. commercial crude oil stocks during the week ended May 17 that lifted inventory to a near 20-month high, suggesting lagging demand in front of the start of the U.S. driving season marked by the upcoming Memorial Day weekend. Gasoline inventory increased an unexpected 3.7 million bbl during the week profiled, while distillate stocks widened a year-on-year surplus to 12.4 million bbl or 10.9%.
Liubov Georges can be reached at liubov.georges@dtn.com
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