Oil rises, but gains capped by demand, U.S.-China tensions
Oil prices rose on Friday as the dollar dropped to a near two-year low, but demand worries amid rising coronavirus cases and the worsening U.S.-China tensions capped gains.
Brent crude gained 0.4%, or 15 cents, at $43.46 per barrel. U.S. West Texas Intermediate crude was up 0.3%, or 12 cents, at $41.19 per barrel.
U.S. unemployment benefits claims increased to 1.416 million last week, a sign that economic recovery is stalled by the coronavirus resurgence.
While the rise in COVID-19 cases is feared to hurt oil demand recovery, investors worried more about the escalating tensions between the world’s two biggest oil consumers–the United States and China.
Washington’s closure order of China’s consulate in Houston prompted Beijing to issue a warning of “retaliation.” Markets are closely watching China’s next course of action.
Meanwhile, Barclays Commodities Research said that oil prices could contract in the near term if fuel demand weakens. The bank revised its 2020 oil surplus forecast from 3.5 million bpd to an average of 2.5 million bpd.