Crude oil prices drifted lower on Friday as concerns about outlook for energy demand resurfaced due to rising tensions between the U.S. and China over the Hong Kong issue.
The Chinese government’s decision that it will not publish an annual growth target due to uncertainties amid the coronavirus pandemic also weighed on crude oil prices.
Output reductions by OPEC and allies, and data from Baker Hughes showing another drop in oil rig count in the U.S. helped limit oil’s slide.
West Texas Intermediate Crude oil futures for July ended down $0.67, or about 2%, at $33.25 a barrel.
Brent crude futures ended down $0.93, or 2.58%, at $35.13 a barrel.
WTI crude futures gained almost 13% in the week, its fourth weekly uptick.
At the annual session of National People’s Congress in Beijing, Premier Li Keqiang said the country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.
In political news, China’s decision to write a new national security law into Hong Kong’s charter has triggered fresh worries on U.S.-China relations.
Republican and Democratic U.S. Senators said on Thursday that they would introduce legislation to impose sanctions on Chinese officials involved in enforcing proposed security laws in Hong Kong.
The legislation would also impose secondary sanctions on banks that do business with entities found to violate the law guaranteeing Hong Kong’s autonomy.
The agressive intent of the Congress with regard to the tone on China is due to China’s alleged role in covering up the initial stages of the coronavirus outbreak.
According to Baker Hughes, the number of active U.S. rigs drilling for oil dropped to 237 this week, down 21 from previous week.
The total rig count has also dropped by 21 this week to 318.