Oil prices ease as negative economic news offsets trade optimism

Oil prices eased on Friday on negative economic news from the United States and China and signs of growing supply despite optimism U.S. trade deals could boost global economic growth and oil demand in the future.
Brent crude futures fell 32 cents, or 0.5%, to $68.86 a barrel, while U.S. West Texas Intermediate crude fell 47 cents, or 0.7%, to $65.56. That put Brent down about 1% for the week and WTI down about 3%. U.S. President Donald Trump on Friday said there was a 50-50 chance or perhaps less that the U.S. would reach a trade agreement with the European Union (EU), saying Brussels wanted to “make a deal very badly”. The euro zone economy has remained resilient to the pervasive uncertainty caused by a global trade war, a slew of data showed on Friday, even as European Central Bank policymakers appeared to temper market bets on no more rate cuts. In the U.S., meanwhile, new orders for U. S. manufactured capital goods unexpectedly fell in June while shipments of those products increased moderately, suggesting that business spending on equipment slowed considerably in the second quarter. Trump also said on Friday that he had a good meeting with Federal Reserve Chair Jerome Powell and got the impression that the head of the U.S. central bank might be ready to lower interest rates.
Central banks, like the Fed or ECB, use interest rates to keep inflation in check. Lower interest rates reduce consumer borrowing costs and can boost economic growth and demand for oil. In China, the world’s second biggest economy, fiscal revenue dipped 0.3% in the first six months from a year earlier, the finance ministry said on Friday, maintaining the rate of decline seen between January and May.The U.S. is preparing to allow partners of Venezuela’s state-run PDVSA (PDVSA.UL), starting with U.S. oil major Chevron, to operate with limitations in the sanctioned nation, sources said on Thursday. That could boost Venezuelan oil exports by a little more than 200,000 barrels per day (bpd), which would be welcome news for U.S. refiners, as it would ease tightness in the heavier crude market, ING analysts wrote. In the Middle East, Iran said it would continue nuclear talks with European powers after “serious, frank, and detailed” conversations on Friday, the first such face-to-face meeting since Israel and the U.S. bombed Iran last month.
Venezuela and Iran are members of the Organization of the Petroleum Exporting Countries (OPEC). Any deal that could increase the amount of oil either sanctioned country could export would boost the amount of crude available to global markets. A meeting of the Joint Ministerial Monitoring Committee, which includes top ministers from OPEC and allies like Russia, a group known as OPEC+, is scheduled for 1200 GMT on Monday.