Oil Suffers Weekly Loss As Beijing Denies Trump's Claim Of Trade Negotiations

Still, metrics paint a far more favourable picture of market health: File Image/Pixabay

The analytical hand wringing that began with the imposition of U.S. president Donald Trump's multi-country tariffs continued unabated on Friday, although the perception that the trade war between China and the U.S. helped oil eke out modest gains.

Brent settled up 32 cents at $66.87 per barrel, while West Texas Intermediate settled up 23 cents at $63.02 per barrel.

However, the extreme bearish sentiment that has dogged the market based largely on sentiment and not fundamentals caused more weekly losses: Brent declined 1.6 percent over the week and WTI dropped 2.6 percent.

While foreign policy experts such as Gordon Chang have gone so far as to say that China may be "caving" to Trump on the tariffs, there was indeed just cause for some optimism on Friday when it was learned that China exempted some U.S. imports from its steep counter-tariffs.

However, Beijing dismissed Trump's assertion that trade negotiations were underway. 

Meanwhile, U.S. energy secretary Chris Wright told media at an energy conference in Oklahoma City that the trade turmoil is only temporary and that Washington fully supports more crude output.

He said, "Our president is very clear and he wants lower energy prices," but he added that oil at $50 per barrel "in today's world probably is not sustainable for our producers in this country" and there will be discrepancies between what they can profitably achieve and what consumers want.

Still, bearish sentiment prevails, as does ongoing concern about the Organization of the Petroleum Exporting Countries (OPEC) reportedly considering accelerating output in June (the cartel will meet on May 5 to discuss its output plans for that month).

Andrew O'Conor, analyst at Morningstar DBRS, wrote in a report, "Further downside to pricing will depend on the magnitude and duration of a global economic slowdown, which now appears underway, and how quickly non-OPEC+ oil producers cut output in response to lower prices."

Morningstar cut its full-year WTI forecast for 2025 to $60 per barrel from $65 per barrel, with no change for both 2026 and 2027.

But all of this detracts from what would normally be encouraging fundamentals, such as some metrics pointing to near-term strength in the oil market: the prompt spread for WTI has widened this month in a bullish backwardation structure, signalling tight supply.

Also, traders have been snapping up barrels that help set benchmark prices in different regions.