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Oil steadied near $56 a barrel in New York before the resumption of talks aimed to resolve a trade dispute between the U.S. and China, while political tensions in the Persian Gulf continue to simmer.
Futures were little changed in New York after rising 1% last week. Chinese and American negotiators meet in Shanghai this week amid tempered expectations for a breakthrough in their year-long trade war that has dented demand. The U.K. has sent one of its Type 45 warships to the region after Iran seized a British oil tanker as the U.S. seeks to build a coalition to protect vessels traversing the strait.
Oil is heading for its second monthly loss this year as a gloomy economic outlook eclipses concerns that crude flows may be disrupted from the Middle East. Hedge funds added to bets on a slump in New York futures at the fastest pace in almost a year after disappointing manufacturing data out of America and Germany last week bolstered fears of declining demand.
“The fragile economic growth caused by the confrontational and protectionist U.S. trade policy is having a profound impact on oil demand and oil-demand growth,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
West Texas Intermediate for September gained 3 cents to $56.23 a barrel on the New York Mercantile Exchange as of 10:39 a.m. London time. The contract rose 18 cents on Friday, rising for the fifth time in six days.
Brent for September settlement fell 14 cents to $63.32 a barrel on the ICE Futures Europe Exchange. It capped a 1.6% weekly gain on Friday. The global benchmark crude traded at a $7.08 premium to WTI.
The U.K. frigate, HMS Duncan, will operate alongside the Royal Navy’s HMS Montrose Type 23 to shepherd British-flagged ships through the strait, the Ministry of Defense said in a statement. The air defense destroyer will operate until late August, it said.
Two days of talks are scheduled to restart Tuesday after a truce reached by Presidents Donald Trump and Xi Jinping on the sidelines of the Group of 20 summit in Osaka, Japan, last month. Deep tensions remain, though, and recent days have brought mixed signals from both sides, with neither showing an urge to compromise.
–With assistance from James Thornhill.
©2019 Bloomberg L.P.