Oil Prices Record Largest Week Drop Since May
By Adedapo Adesanya
Oil prices recorded a further round of depreciation on Friday as the tension between the United States and Middle East rival, Iran, that saw futures hit their highest since September, led the market to record its largest drop for the week since May.
Following the assassination of top Iranian general, Qassem Soleimani on January 3 by the United States Military Brent crude, the international benchmark rose to over $70 per barrel but after consecutive losses, it ended Friday dropping close to $5 to trade at $65.27 per barrel.
The US West Texas Intermediate (WTI) crude, following the military attack on Soleimani, gained up to 6 percent to trade over $64, but on Friday, it shed over $5 to trade at $59.30 per barrel.
Prices had been on the rise following a retaliatory Iranian missile launch on Iraqi bases where American military forces were without any casualties. However, President Donald Trump said that he would seek additional economic sanctions instead of going for a counter military action.
This started the process of oil prices losing their gains as the market fell on Wednesday, Thursday, and Friday as traders soon discovered that the issue wasn’t going to escalate.
Rise of a higher supply in US crude inventories also pulled oil prices lower in the week as data from the Energy Information Administration (EIA) showed that US crude supplies rose by 1.2 million barrels for the week ended January 3 after dropping for three consecutive session.
With the pressure of the US-Iran disruption easing, all eyes will turn to the US-China trade deal expected to be signed next week as China’s Vice Premier Liu He, will lead his team to Washington DC to sign the first phase of the deal with the United States.
US President Donald Trump confirmed on December 31 that the Phase 1 deal with China would be signed on January 15 at the White House.
The Phase 1 deal reached last month is expected to cut tariffs and boost Chinese purchases of US farm, energy and manufactured goods while addressing some disputes over intellectual property.