Oil Prices Set for Weekly Drop as Trade Worries Weigh

Oil prices came under pressure on Friday from U.S.-China trade tensions and were on course for a third straight week of falls.

Brent crude was up 57 cents at $73.15 a barrel by 1344 GMT. The expiring U.S. West Texas Intermediate (WTI) crude for August delivery was up 28 cents at $69.74 a barrel, while the more traded September contract fell 13 cents to $68.11.

U.S. President Donald Trump said in a CNBC interview he was ready to put tariffs on $500 billion of imported goods from China.

Lower oil demand in the United States and China caused by an economic slowdown from their trade dispute would likely weigh heavily on markets.

"The impact on world economic growth of a levy of this magnitude will be severe and will likely have a strong negative impact on markets," Olaf van den Heuvel, Chief Investment Officer at Aegon Asset Management, said.

The People's Bank of China on Friday reduced its mid-point for the yuan for the seventh straight trading day to the lowest in a year.

The yuan then retreated to a near 13-month low although it rebounded later.

Trump also said he was concerned that the Chinese currency was "dropping like a rock" and that the strong U.S. dollar "puts us at a disadvantage".

The United States accounted for about a fifth of global oil demand in 2017, while China consumed around 13 percent, according to the BP Statistical Review of Energy.

A group of Norwegian drilling rig workers agreed on Thursday to end a strike that began on July 10, removing a threat to oil and gas production in the region.

"Acting as a further brake on upside potential was the conclusion of an oil workers’ strike in Norway," said Stephen Brennock, an analyst at London brokerage PVM Oil Associates.

But prices found some support after OPEC's largest oil producer said it would temper its exports next month.

Saudi Arabia expects its exports to drop by roughly 100,000 barrels per day in August to ensure it does not push more oil into the market than customers need, the kingdom's OPEC Governor Adeeb Al-Aama said.

"Despite the international oil markets being well balanced in the third quarter, there will still be substantial stock draws due to robust demand and seasonality factors in the second half," Al-Aama said in a statement.

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

By Ahmad Ghaddar, Additional reporting by Aaron Sheldrick in Tokyo