Oil prices rise; still set for third weekly drop on oversupply, U.S

Brent oil had climbed 27 cents, or 0.4 percent, to $72.85 a barrel by 0655 GMT. U.S. West Texas Intermediate (WTI) crude was up 29 cents, or 0.4 percent, at $69.79 a barrel.

However, both benchmarks are on track for their third weekly loss, after big declines on Monday, with Brent set to decline 3.3 percent and WTI to fall by 1.8 percent.

Prices have been dragged down by worries about oversupply as some production returned after outages, while trade tensions between the United States and China stoked fears of damage to their economies and their demand for commodities. Although, markets edged up on Friday in the wake of Saudi Arabia moving to allay some fears of oversupply.

“Risk sentiment is wobbling, which I believe is attributed to PBOC pushing the RMB complex lower via the fix,” said Stephen Innes, head of trading APAC at OANDA brokerage.

“Markets are now nervous, not only about a trade war, but also a currency war.”

The People’s Bank of China (PBOC) on Friday reduced its mid-point for the yuan for the seventh straight trading day to the lowest in a year.

The yuan then retreated to a near 13-month low though it rebounded later in the day.

U.S. President Donald Trump said in an interview on CNBC television that he was concerned that the Chinese currency was “dropping like a rock” and the strong U.S. dollar “puts us at a disadvantage”.

Lower oil demand in the United States and China caused by an economic slowdown from their trade war would likely weigh heavily on oil markets.

The U.S. accounted for about a fifth of global oil demand in 2017, while China consumed around 13 percent, according to the BP Statistical Review of Energy.

There was some support for prices based on comments from Saudi Arabia, the world’s biggest oil exporter, that it would cut crude shipments.

The country expects exports to drop by roughly 100,000 barrels per day in August as it works to ensure it does not push oil into the market beyond customers’ needs, the kingdom’s OPEC Governor Adeeb Al-Aama said.

“Despite the international oil markets being well balanced in the third quarter, there will still be substantial stock draws due to robust demand and seasonality factors in the second half,” Al-Aama said in a statement.

He also said concerns that Saudi Arabia and its partners are moving to substantially oversupply the market are “without basis”.