Crude futures pulled back, giving up gains from the previous session as trade concerns weighed on the market and fueled concerns about demand.
US West Texas Intermediate crude futures settled down 47 US cents at $US68.49 a barrel on Friday, while brent crude futures settled at $US73.21 a barrel, down 24 US cents from their last close.
Both grades briefly traded down more than $US1 a barrel.
US crude ended the week down 0.4 per cent, while Brent has fallen 1.5 per cent in the week so far.
‘It’s a jittery feel here, as long as we have Iranian sanctions uncertainty and tariff uncertainty, and it doesn’t take much to spark a significant swing one way or the other,’ said Jim Ritterbusch, an analyst in Galena.
Fears that Chinese demand could taper fueled the pullback on Friday after state oil major Sinopec cut its purchases of US crude.
China’s Unipec, the trading arm of Sinopec, has suspended crude oil imports from the US due to the growing trade spat between Washington and Beijing, three sources familiar with the situation said on Friday.
‘Chinese demand from the independent refiners is also lower while the escalating trade war also doesn’t help sentiment,’ said Warren Patterson, commodities strategist at ING.
China has said it plans to impose tariffs on liquefied natural gas, raising concerns that it could also impose tariffs on oil, said John Kilduff, partner at Again Capital Management.
US nonfarm payrolls rose in July, but the US trade deficit recorded its biggest increase in more than 1-1/2 years in June as the boost to exports from soybean shipments faded and higher oil prices lifted the import bill.
The Commerce Department said on Friday the trade gap surged 7.3 per cent to $US46.3 billion.
Russian oil output rose by 150,000 barrels a day in July from a month earlier to 11.21 million barrels a day, energy ministry data showed on Thursday.
Output by top exporter Saudi Arabia has also risen recently, to around 11 million barrels a day, and US production is around that level as well.
Saudi Arabia, Russia, Kuwait and the United Arab Emirates have increased production to help to compensate for an anticipated shortfall in Iranian crude supplies once planned US sanctions take effect later this year.
But a complete halt to Iranian supplies looks unlikely with Bloomberg reporting on Friday that China, Iran’s biggest customer, has rejected a US request to cut imports from the OPEC member.
Low US stockpiles were still providing a floor for prices, with overall US crude inventories below the five-year average of around 420 million barrels.
But there were concerns about potential stockpile builds as supply returns from a Canadian production facility that has been shuttered.
US drillers cut rigs for the second week in three, reducing the number of oil rigs by two to 859.
The rig count can be a forward-looking indicator of production.
Hedge funds and other money managers cut their bullish US crude bets in the latest week, as oil prices were range-bound, pinned between concerns about tight supply due to sanctions and fears that trade disputes could curb demand.
The speculator group cut its combined futures and options position in New York and London by 5,287 contracts to 407,001 during the week ending July 31, the US Commodity Futures Trading Commission said on Friday.