Oil prices set for weekly fall as US-China trade tensions weigh

LONDON: Oil prices edged up on Friday but were still set to fall over the week, as support due to supply concerns was countered by trade tensions stoked by a US move to hike tariffs on Chinese goods.

Brent crude oil was up 29 cents at $70.68 a barrel by 1356 GMT, having touched a peak of $71.23.

US West Texas Intermediate (WTI) crude futures were up 13 cents at $61.83, having earlier hit $62.49.

Both contracts were on track for weekly losses.

The United States escalated its tariff war with China on Friday by increasing levies to 25% for $200 billion worth of Chinese goods. Talks were to continue on Friday.

Trump ordered the tariff increase, saying China "broke the deal" by reneging on previous commitments. He said he would start "paperwork" for 25% duties on a further $325 billion of Chinese imports, saying he was in no rush for a deal.

Tighter supplies amid continuing production cuts by the Organization of the Petroleum Exporting Countries and US sanctions on Iran and Venezuela provided some support.

Growing trade between the world's two largest oil consumers could affect oil demand. The United States and China together accounted for 34% of global oil consumption in the first quarter of 2019, data from the International Energy Agency shows.

While trade war concerns have weighed on prices this week, "the spreads clearly point towards a tight market", ING bank said.

The July Brent crude contract was trading at nearly $1 a barrel above the August contract in a market structure known as backwardation.

The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and world powers last year.

It initially allowed Tehran's biggest buyers to continue purchasing oil via waivers for another six months, but those exemptions ended at the beginning of May, with Washington seeking to cut Iran's oil exports to zero.

Efforts by OPEC to crimp supply to reduce global inventories have also supported prices.

Markets have been buoyed further by expectations that oil demand will rise in 2019. The US Energy Information Administration expects global appetite for oil to rise by 1.4 million barrels per day this year.