LONDON (Reuters) – Oil prices were steady on Monday as U.S.-China trade tensions continued to threaten demand for oil, but tight crude supply and the swift end to a trade dispute between Mexico and the United States offered support.
FILE PHOTO: A view shows a well head and a drilling rig in the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk Region, Russia March 11, 2019. REUTERS/Vasily Fedosenko/File Photo
Front-month Brent crude futures were at $63.42 at 0850 GMT, 13 cents, or 0.21%, above Friday’s close.
U.S. West Texas Intermediate (WTI) crude futures were at $54.19 per barrel, up 20 cents, or 0.37%.
A deal between the United States and Mexico to combat illegal migration from Central America late last week removed the threat of U.S. tariffs on goods imported from Mexico, buoying markets on Monday.
But analysts said there were still concerns about the health of the global economy with no signs of an end in sight to the United States’ trade war with China.
Harry Tchilinguirian, global oil strategist at BNP Paribas, told the Reuters Global Oil Forum that the U.S. and China accounted for around three-quarters of annual global oil demand growth in 2018.
“If Sino-U.S. relations do not improve, the spot price of oil, in our view, will remain depressed,” he said.
China’s crude oil imports slipped to around 40.23 million tonnes in May, down from an all-time high of 43.73 million tonnes in April, customs data showed on Monday, due to a drop in Iranian imports caused by U.S. sanctions and refinery maintenance.
Barclays bank, in a note, said over the past week or so its economists had revised down their GDP growth outlook for the U.S., China, India and Brazil – countries which account for more than three-quarters of their oil demand growth assumptions for this year.
“The revisions imply a 300,000 barrel per day reduction in our current global oil demand outlook of 1.3 million barrels per day year-on-year for this year,” the British bank said.
Crude prices were supported by comments by OPEC’s biggest producer Saudi Arabia on Friday that the group was close to agreeing an extension to supply cuts.
The Organization of the Petroleum Exporting Countries (OPEC) and some non-members, including Russia, known collectively as “OPEC+”, have withheld supplies since the start of the year to prop up prices.
Saudi Energy Minister Khalid al-Falih said on Monday that Russia was the only oil exporter still undecided on the need to extend the output deal, as Moscow considers whether further cuts could allow the United States to take Russian market share.
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Additional reporting by Henning Gloystein; Editing by Kirsten Donovan