Oil prices set to drop for a second week

• US-China trade war hits oil price
• Crude consumption likely to fall
• China raises tariffs against US

Oil prices increased slightly on Friday morning but were still set for an overall drop for a second week due to concerns about a prolonged trade war between the United States and China.

If the the world’s largest economies continue their tit-for-tat tariff increases, the fear is they will crush crude consumption as their dispute curtails economic growth.

Brent rose 14 cents, or 0.2 percent, to $63.47 a barrel by 05:22 GMT, while US West Texas Intermediate also rose 0.2 percent, to $60.21, after the benchmarks settled over $2 lower on Thursday.

Brent is set to fall 3.2 percent this week, while WTI is set to decline 2.9 percent. Both benchmarks declined 11 percent in the previous week.

A prolonged trade dispute between the US and China is likely to reduce global trade volumes and disrupt trade routes. It is likely to eventually weigh on global economic growth.

As the world’s two largest oil consumers, that will also impact crude consumption.

Oil prices have come “under pressure amid ongoing concerns about a global economic slowdown,” Daniel Hynes, senior commodity strategist at ANZ, said in a note on Friday. He added the bank forecasts that if global economic growth falls below 3 percent, oil consumption will decline by 1 percent.

The trade war between the two economic superpowers has ratcheted up after Donald Trump raised tariffs against China to 145 percent on Thursday, even after announcing a pause on heavy tariffs against dozens of trading partners on Wednesday.

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China, in turn, has announced an additional import levy on US goods, raising their tariffs to 84 percent.

The US Energy Information Administration on Thursday lowered its global economic growth forecasts and warned that tariffs could weigh heavily on oil prices, as it slashed its US and global oil demand forecasts for this year and next.