Oil slips on recession fears but posts 3rd weekly gain
Shafaq News/ Oil prices fell onFriday on worries that U.S. tariff wars could spark a global recession, butgained for a third consecutive week after Washington ratcheted up pressure onOPEC members Venezuela and Iran.
Brent crude futures fell 40 cents,or 0.5% to settle at $73.63 a barrel. U.S. West Texas Intermediate crudefutures (WTI) fell 56 cents, or 0.8%, to close at $69.36 a barrel.
U.S. President Donald Trump plans toannounce reciprocal tariffs targeting a wide range of imports, effective onApril 2.
The trade war has investors worriedabout a potential recession, JPMorgan analysts told clients.
"Concerns about a trade war,coupled with elevated U.S. policy uncertainty, are weighing heavily onsentiment," they said.
Although recession risk waselevated, high-frequency oil demand indicators have held up relatively well fornow, JPMorgan noted.
Mid-week data from the EnergyInformation Administration showed U.S. crude inventories fell by 3.3 millionbarrels to 433.6 million barrels last week, compared with analysts'expectations in a Reuters poll for a 956,000-barrel draw.
On a weekly basis, Brent futuresgained 1.9%, while WTI rose 1.6%. Since hitting multi-month lows in earlyMarch, Brent is up more than 7%, and WTI has rebounded over 6%.
"The key theme this week wasthe Trump administration ratcheting up the pressure on the Maduro regime inVenezuela," Barclays analyst Amarpreet Singh said.
Trump on Monday announced new 25%tariffs on potential buyers of Venezuelan crude, days after U.S. sanctionstargeting China's imports from Iran.
The measures could exacerbate ananticipated 200,000 barrel-per-day decline in Venezuelan crude oil output thisyear, Singh said.
It has compounded uncertainty forbuyers and saw trade of Venezuelan oil to top buyer China stall. Elsewhere,sources said India's Reliance Industries, operator of the world's biggestrefining complex, will halt Venezuelan oil imports.
Oil markets are readjusting globalsupply expectations as a result of U.S. sanctions against Venezuela and Iran,with Trump having promised to drive the latter's oil exports to zero. The U.S.has issued four rounds of sanctions targeting Iran's oil sales since Trump'sreturn to the White House.
The second quarter should be tighterthan originally thought, StoneX analyst Alex Hodes said. "If there arereductions in Venezuelan or Iranian crude oil barrels on the market this wouldcertainly be a bullish development."
The OPEC+ group is set to begin itsprogram of monthly increases to oil production in April. The group, whichcomprises OPEC and allies led by Russia, will likely continue to raise oiloutput in May, Reuters reported on Monday.
(REUTERS)
