Crude oil prices declined marginally on Friday, as concerns about possible drop in demand due to trade war tensions slightly outweighed recent data showing a fall in crude stockpiles.
Data released by the Energy Information Administration on Thursday showed crude stockpiles in the U.S. to have declined by 4.3 million barrels in the week ended August 31. That was a much larger than expected drop.
Crude oil futures for October delivery settled at $67.75 a barrel, down 2 cents, from previous close. For the week, crude oil future shed about 2.9%.
U.S.-China trade tensions have escalated today after U.S. President Donald Trump reportedly announced that his administration intends to go ahead with tariffs on US$200 billion worth of Chinese imports.
He reportedly added, "And I hate to say that, but behind that, there's another US$267 billion ready to go on short notice if I want. That totally changes the equation."
China had already warned that it will be forced to retaliate if the United States implements any new tariff measures.
The Chinese economy has slowed down due to trade war and further setbacks could result in a significant drop in China's oil imports.
Meanwhile, Trump also remarked that he was "still bothered by the terms of U.S. trade with Japan." This suggests more is coming up on the trade war front. A full-blown trade war could significantly hurt the outlook for global economic growth and result in a drop in demand for crude oil.
However, with U.S. sanctions against Iranian oil set to take effect in November and reports about supply disruptions now and then in Libya and Venezuela likely, traders are hoping that crude oil prices may edge higher going forward.
A report from Baker Hughes, released at 1 PM ET, showed that the number of active U.S. rigs drilling for oil was down by 2 to 860 this week. Last week, the rig count had edged up by 2. With this week's drop, the total active U.S. rig count, including oil and natural-gas rigs, remains unchanged at 1,048, the report from Baker Hughes reveals.