Oil Down For The Week As Bullish/Bearish Elements Nullify Forward Trajectory

But Iraq's output disruptions are stoking tightness fears: File Image/Pixabay

Rudderless oil traders caused oil to dip on Friday, contributing to a 2 percent weekly loss for two key benchmarks as a host of both bullish and bearish news negated any clear-cut trajectory and kept the commodity firmly in the $60s.

Brent settled down 24 cents at $69.28 per barrel, and West Texas Intermediate settled down 20 cents at $67.34.

Confusing traders in U.S. develops was a report from the University of Michigan's Surveys of Consumers that consumer sentiment improved in July and inflation expectations continued to decline.

However, this was contrasted by another report, from the U.S. Commerce Department, showing   that high mortgage rates and economic uncertainty were responsible for single-family homebuilding dropping to an 11-month low in June.

Additionally, even though U.S. president Donald Trump’s tariffs have already benefitted the American economy to the tune of a $27 billion budget surplus for June, Trump pushing for a minimum 15-20 percent tariff in any deal with the European Union caused hand-wringing in analytical circles on Friday.

Citigroup's Citi Research said in a note, "Currently envisioned reciprocal tariffs, coupled with announced sectoral levies, could push the U.S. effective tariff rate above 25 percent, surpassing 1930s peaks ... In coming months, the tariffs should increasingly be manifest in inflation."

As for geopolitical developments, the EU agreed to a lower (15 percent below the average market price) cap for Moscow’s crude as part of a sanctions package, including restrictions on fuels made from Russian petroleum, additional banking limitations, and a ban on a large oil refinery in India.

Rebecca Babin, a senior energy trader at CIBC Private Wealth Group, said, “While the EU measures may not drastically impact crude flows, the restrictions on refined products and expanded shadow fleet targeting are fueling concern in the diesel complex.”

Huang Wanzhe, an analyst at Dadi Futures Co., added, “The logic of diesel tightness propping up crude flat prices remains unchanged; the key question is how long this strength can last.”

Also on the geopolitical front, Friday’s trading losses were said to be minimized by concerns over supply disruptions following drone strikes on oilfields in Iraq's Kurdistan region, which have resulted in the disruption of more than 200,000 barrels per day of production.