Oil prices rise; still set for third weekly drop on oversupply, U.S.-China trade dispute

TOKYO (Reuters) – The United States and China, the world's two biggest chicks on the table oil users.

Brent oil rose 7 cents to $ 72.65 at barrel by 0354 GMT, after rising to $ 73.04 earlier in the day.

U.S. West Texas Intermediate (WTI) CLc1 was up 14 cents at $ 69.60 a barrel, after reaching a high of $ 70.03 earlier.

However, both benchmarks are on track for their third weekly loss, after big declines on Monday, with Brent set to drop to 3.6 percent and WTI to fall by 2 percent.

Prices have been dragged down by concerns about oversupply as some production is returned after outages, while trade tensions between the US and China stuck fears of damage to their economies and commodities demand.

Saudi Arabia had moved on Thursday to allay fears of oversupply, which had supported prices.

But concerns about U.S. and China are coming to fore again as China's currency falls, said Stephen Innes, APAC head of trading at OANDA brokerage.

"Risk sentiment is wobbling, which I believe is attributed to PBOC pushing the RMB complex lower through the fix," Innes said. "Markets are now nervous, not just about a trade war, but also a currency war."

The People's Bank of China (PBOC) on Friday closed its mid-point for the yuan for the second straight day to the lowest in a year.

With China showing little signs of arresting its currency depreciation, the yuan promptly retreated to a near-13-month low.

Lower oil demand in the United States and China caused by an economic slowdown from their trade war would have oversized impacts on the market.

The U.S. accounted for 20.2 percent of global oil demand in 2017 while China consumed 13 percent of the world's oil last year, according to the BP Statistical Review of Energy.

There was some support for Saudi Arabia, the world's biggest oil exporter, that it would cut crude shipments.

The country expects exports to the market in the marketplace of the United States.

"Despite the international oil markets, it is still strong in the second half," Al-Aama said in a statement.

He also said that Saudi Arabia and its partners are moving to substantially oversupply the market "without basis".