Oil Futures Mixed Tuesday Morning

WASHINGTON, D.C. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange moved mixed Tuesday morning, with West Texas Intermediate bouncing back from the biggest weekly drop of the year, while the continued U.S.-China tariff fight limits the upside.

U.S. crude futures were trading around $59 per barrel (bbl) early Tuesday, clawing back some of the hefty losses of a trade-induced selloff last week. U.S. President Donald J. Trump reiterated on Monday the country is "not ready" to make a trade deal with China, while warning that U.S. tariffs "could go up very substantially, very quickly." Meanwhile, Chinese officials said this weekend tariffs would have only limited impact on the economy, suggesting China is positioning for a protracted trade dispute. Bloomberg economists estimate global growth could take up to a $600 billion hit in the next two years if tariffs expanded to include all U.S.-China trade.

Against the backdrop of demand concerns, oil futures continue to draw support from the risk of military conflict in the Middle East. The United States announced on Friday it would more than double the number of troops in the Gulf region, deploying 1,500 of additional personnel in response to Iran threats. U.S. military also said Iran was directly responsible for attacks on Saudi oil tankers off the coast off the United Arab Emirates.

International crude Brent contract is trading just below $11 bbl premium to the U.S. WTI benchmark, the widest spread in almost a year. WTI futures were also supported by the latest rig count data showing U.S. oil drillers cut rigs for a third consecutive week to the lowest level since the final week of March 2018. The number of active oil rigs in the United States fell five to 797, as domestic producers continue to focus on earnings growth instead of increased production.

Near 9 a.m. ET, NYMEX July WTI futures were up $0.60 near $59.25 bbl, with ICE July Brent little changed at $72.05 bbl. NYMEX June ULSD futures were up 4 cents near $2.0115 gallon, with the June RBOB contract 3 cents higher at $1.9645 gallon.

Liubov Georges can be reached at liubov.georges@dtn.com