US-China relations push oil prices down

SARAJEVO, (Patria) - Oil prices fell on Friday on international markets to $35 due to increased tensions between the United States and China, and doubts about a swift recovery in demand in the crisis caused by the coronavirus pandemic.

On the London market, the price of a barrel was down $1.03 from the previous close, standing at $35.03. On the US market, a barrel was traded at a price $0.96 lower, at $32.96.

China is preparing to adopt new national security laws in Hong Kong, to which US President Donald Trump responded with a warning.

At the same time, due to the severe consequences of the pandemic, Beijing has not announced its intended economic growth rate for this year, for the first time since it introduced this practice, reports Montenegrin MINA.

"Investors once again have to navigate the increasingly strong verbal war between the US and China," said Stephen Brennock from the consulting firm PVM.

He reminded that the coronavirus has nullified decades of growth in global oil demand and that the recovery will be slow.

Governments around the world have begun to ease movement and travel restrictions introduced to curb the spread of the new coronavirus, leading to the first signs of demand recovery.

Gasoline demand is growing, and some airlines are planning the return of European travel, which has boosted oil prices this week.

A significant drop in prices was also prevented by reduced supply from leading producers led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, who agreed to cut production by 9.7 million barrels per day for May and June.

Traders remain cautious.

"The oil market is not out of the woods yet. We believe that the price increase in the oil market was excessive," stated Eugen Weinberg from Commerzbank.

Attention is now turning to US demand for the extended Memorial Day weekend in the US, when fuel consumption typically rises.

Due to holidays in the Muslim world, OPEC did not publish the price of a barrel of its member countries' reference oil basket on its website on Thursday. On Tuesday, it stood at $28.43.