Crude oil prices rose by more than 2% on Friday, recovering from their biggest decline since years after US President Donald Trump imposed new duties on Chinese imports, intensifying the trade war between the two largest economies in the world and crude oil consumers.
The Brent variety fell by 7% on Thursday, which is the biggest crash in three years, while the decline in US crude oil WTI was 8%, which was the worst day in 4 years. The collapse put an end to the fragile rally, built on steady declines in US inventories, even as global demand seemed unstable due to a trade dispute.
Today, the Brent oil variety rose by 1.51 USD, or 2.5%, to 62.01 USD per barrel, while US light crude oil WTI rose by 1.06 USD, or 2%, to 55.01 USD per barrel.
Trump said on Thursday that he would impose a 10% duty on Chinese imports worth 300 billion USD as of September 1, and could raise the tariffs further if Chinese President Xi Jinping does not take faster action to reach a trade deal. The move extends Trump’s duties to practically all of China’s imports to the United States and marks a halt to the temporary ceasefire in a trade war that disrupts global supply chains and upsets financial markets.
The US economy grew by 2.1% in the second quarter, which exceeded the expectations of economists, although growth was slower than those for the first quarter. However, there are some signs of the economic downturn over the US-China trade war, which reported a slowdown in production in July this week.
Manufacturing activity in the US also declined last month, falling to near three-year lows, and construction costs also declined in June, as an investment in private construction projects fell to its lowest level in a year and a half.
The economic slowdown has been transformed into reduced demand for oil in the US, the world’s largest commodity user.
The amount of crude oil processed at US oil refineries is 17.2 million barrels per day in the last four weeks, down by 1.3% from a year ago, shows the US government figures.
US oil inventories
The Energy Information Administration on Wednesday reported that US crude supplies declined by 8.5 million barrels for the week ended July 26. Analysts polled by S&P Global Platts, on average, expected a decline of 3.9 million barrels, while the American Petroleum Institute on Tuesday reported a 6 million-barrel drop.
This compares with a 10.8-million-barrel inventory draw a week previously.
The EIA went on to report a 1.8-million-barrel decline in gasoline inventories for last week. This compares with a 200,000-barrel decline in inventories a week earlier.
In distillate fuels, the authority reported a 900,000-barrel fall, which compared with an increase of 600,000 barrels per day a week earlier.
In production, the EIA reported an average gasoline production rate of 10.4 million barrels per day for last week, up from 10.1 million barrels per day a week before that. Distillate fuel production averaged 5.2 million barrels per day, slightly down on a week earlier.
Refineries processed a total of 17 million barrels daily last week, unchanged on a week earlier.