Oil Prices are Expected to Fall for a Second Consecutive Week as the US-China Trade Conflict is Anticipated to Reduce Demand

Oil prices remained relatively stable on Friday and were poised to decline for the second consecutive week due to concerns that a prolonged trade conflict between the United States and China would hinder economic growth and lower crude demand. Brent futures increased by 14 cents, or 0.2 per cent, to reach $63.47 a barrel by 0522 GMT, while U.S. West Texas Intermediate crude futures also climbed 0.2 per cent to $60.21, following a decline of over $2 for the benchmarks on Thursday. Brent is expected to decrease by 3.2 per cent this week, whereas WTI is projected to drop by 2.9 per cent. Both benchmarks fell by 11 per cent in the last week. 

A lengthy conflict between the two largest economies in the world is expected to decrease global trade levels and interrupt trading pathways, ultimately impacting global economic expansion. "BMI analysts noted on Friday that we foresee prices continuing to face pressure as investors evaluate ongoing trade discussions and escalating tensions between Washington and Beijing." Daniel Hynes, a senior commodity strategist at ANZ, mentioned in a note that worries regarding a global economic slowdown were also weighing down oil prices. The bank anticipates a 1% drop in oil consumption if worldwide economic growth dips below 3 per cent, according to Hynes.

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On Thursday, U.S. President Donald Trump increased tariffs on China to 145 per cent, despite having declared a halt on substantial tariffs against many trading partners earlier this week. China, in response, has declared another import tax on American products. On Thursday, the U.S. Energy Information Administration reduced its projections for global economic growth and cautioned that tariffs might significantly impact oil prices, as it cut its forecasts for U.S. and worldwide oil demand for this year and the next. BMI analysts indicated that the OPEC+ gathering on May 5 might be crucial, demonstrating a willingness to act in favor of market stability. The analysts stated, "The declaration of further supply increases at the upcoming meeting could probably initiate a fresh selloff."