Oil prices eased on Friday on renewed concern over the US-Chinese trade conflict but futures still posted weekly gains, with Brent marking its biggest weekly increase since January after an attack on Saudi Arabia’s energy industry last weekend.
Brent crude futures fell 12 US cents to settle at $US64.28 a barrel on Friday while US West Texas Intermediate (WTI) crude futures ended 4 US cents lower at $US58.09 a barrel.
Prices pared gains along with the stock and grains markets after Chinese agriculture officials that were due to visit US farm states next week cancelled their trip to Montana and Nebraska to return to China sooner than originally scheduled.
The cancellation came as trade talks were held in Washington DC and US President Donald Trump said he wanted a complete trade deal with the Asian country rather than just an agreement for China to buy more US agricultural goods.
For the week, however, Brent rose 6.7 per cent, its biggest gain since January, while WTI gained 5.9 per cent – the most since June.
US shale producers pounced on the chance to lock in future revenue for this year and next after oil prices surged by the most in 30 years earlier last week following the attack, sources familiar with the money flows said.
Money managers raised their net long US crude futures and options positions by 11,209 contracts to 220,758 in the week to September 17, the US Commodity Futures Trading Commission (CFTC) said.
The oil market jumped nearly 20 per cent on Monday in reaction to the September 14 attack, which halved Saudi production and cut global supplies by about 5 per cent.
But prices have since pared most of those gains on assurances from the kingdom that it would restore lost production by the end of this month.
Prices, however, have kept a risk premium as geopolitical tensions in the region have escalated with the United States and Saudi Arabia blaming the attack on Iran.
Officials in Tehran deny any involvement.
The attack has intensified a years-long struggle between Saudi Arabia and Iran, who are locked in a sometimes violent contest for influence in several flashpoints around the Middle East.
A Saudi-led coalition on Friday launched a military operation north of Yemen’s port city of Hodeidah while the United States worked with Middle East and European governments to build a coalition to deter Iranian threats.
State-owned Saudi Aramco has switched crude grades and delayed crude and oil product deliveries to customers by days after the attack severely reduced its light oil production and led to output cuts at its refineries, market sources said.
Whilst showing reporters the damaged the Khurais field and the Abqaiq oil processing facility, Aramco said it was shipping equipment from the United States and Europe to rebuild the damaged facilities.
It also said that Abqaiq is expected to have full capacity restored by the end of the month.
“The question is can they convince the market that they can keep their oil fields safe,” said Phil Flynn, an analyst at Price Futures Group in Chicago, in a note.
In the United States, meanwhile, flooding from Tropical Storm Imelda forced a major refinery to cut production while a key oil pipeline, terminals and a ship channel in Texas were shut, according to sources familiar with operations.
Exxon Mobil Corp shut some units at its 369,024 barrel per day (bpd) Beaumont refinery while Valero Energy Corp reduced production at its 335,000 bpd Port Arthur refinery.
US energy firms this week reduced the number of oil rigs operating for a fifth week in a row to the lowest since May 2017.
Drillers cut 14 oil rigs in the week to September 20, bringing the total count down to 719, General Electric Co’s Baker Hughes energy services firm said.