Oil mixed on U.S.-China tensions but heads for huge monthly rise

NEW YORK (Reuters) – Oil prices were mixed on Friday, but were closing out the month with strong gains, bolstered growing fuel demand even as investors worried about worsening Washington-Beijing relations.

FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

July Brent crude futures LCOc1 fell 33 cents to $34.96 a barrel by 1:36 p.m. EDT (1736 GMT) However, the more active August contract gained 12 cents to $36.16. U.S. West Texas Intermediate (WTI) crude CLc1 inched up 3 cents to $33.74 a barrel.

Both benchmarks were on course for a steep monthly rise due to falling global production and expectations for demand growth as parts of the United States, including New York City, countries move to reopen after coronavirus-related lockdowns. [nL1N2DB1OJ]

WTI is on track for a record monthly rise of 79% after trading negative last month. Brent is set for a 38% increase for its strongest monthly rise since March 1999.

Thursday’s Energy Information Administration data, which showed U.S. crude oil and distillate inventories rose sharply last week, also provided signs of hope as the delivery hub for WTI futures contracts in Cushing, Oklahoma posted another large decline in storage.

“The situation at Cushing has been very positive, but there’s still some hangover with the report,” said Bob Yawger, director of energy futures at Mizuho, citing slack fuel demand.

This year, oil prices have fallen more than 40% due to lower demand caused by efforts to limit travel and shut businesses to combat the virus.

Further deterioration in U.S.-China relations over Beijing’s plan to impose national security legislation on Hong Kong limited gains.

U.S. President Donald Trump is due to announce his response to the situation in Hong Kong later on Friday.

“Sustaining these price declines will hinge, to a significant extent, on Trump’s expected comments today that could determine how the oil market finishes this week and month,” said Jim Ritterbusch of Ritterbusch and Associates.

Additional reporting by Ahmad Ghaddar in London and Florence Tan in Singapore; Editing by Marguerita Choy, Susan Fenton and Nick Zieminski

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