USA oil closes lower Friday after Trump's latest China trade threats

Oil inches higher

Oil firm

The U.S. Energy Information Administration said it expected domestic crude oil production to rise by 750,000 barrels per day (bpd) to 11.44 million bpd next year, more than previously expected.

New York-traded West Texas Intermediate crude futures jumped $1.56, or about 2.5 per cent, to $65.02 a barrel while Brent crude futures, the benchmark for oil prices outside the US, rose $1.66, or roughly 2.4 per cent, to $70.31 a barrel.

On Tuesday, Brent crude rose 3.5 percent, while WTI gained 3.4 percent overall.

Brent crude futures were last up US$1.35 at US$70.00 a barrel by 1418 GMT, while West Texas Intermediate crude futures rose US$1.30 to US$64.72 a barrel.

Oil markets stabilised on Monday after slumping about 2% last Friday on the concern over an intensifying trade dispute between the U.S. and China, as well as increased U.S. drilling activity.

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Crude prices rallied for the second day in a row yesterday, as appetite for riskier assets improved after a speech by Chinese President Xi Jinping eased concerns about a trade conflict between the United States and China.

Oil prices have been in a volatile situation for the past few days, due to concerns over a continuous trade dispute between the USA and China, and uncertainty over the supply and demand balance of global oil markets.

Investors looked forward to data on US crude inventories and Organisation of Petroleum Exporting Countries (OPEC) production levels.

Oil prices have generally been supported by healthy demand as well as by supply restraint led by oil cartel Opec, which started in 2017 in order to rein in oversupply and prop up prices.

There are also concerns that the United States could renew sanctions against Iran, a major Middle East oil producer.

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Monthly oil reports are also due out from the Organization of the Petroleum Exporting Countries on Thursday and the International Energy Agency on Friday.

OPEC and other producers, including Russian Federation, agreed to cut output by about 1.8 million barrels per day (bpd) in November last year to slash global inventories to the five year-average.

"Oil prices remain rangebound with WTI oil right in the middle of the $60-$65 per barrel range that has largely held since January of this year", said William O'Loughlin, investment analyst at Australia's Rivkin Securities.

The Saudis want oil prices near $80 to help support the valuation of Saudi Aramco ahead of its IPO, Bloomberg reports.

However, soaring U.S. crude production, which has jumped by a quarter since mid-2016, threatens to undermine Opec's efforts.

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