Oil prices made modest gains on Friday but remained on course for a weekly decline, as expectations of increased supply from OPEC+ producers and continued uncertainty over US-China trade relations weighed on market sentiment.
Brent crude futures were up 0.4% to $65.91 a barrel on Friday morning, while US West Texas Intermediate (WTI) crude rose 0.1% to $62.87 a barrel. Both contracts, however, remain down roughly 2% for the week, pressured by persistent concerns over oversupply.
According to a Reuters report, several OPEC+ members are pushing to accelerate output increases in June, extending May’s unexpected production boost of 411,000 barrels per day. The proposed hike has deepened internal divisions within the group over quota compliance and comes at a time when oil prices are hovering near four-year lows.
Analysts warn that a further increase in supply could place additional downward pressure on prices, particularly given the fragile demand outlook amid global economic headwinds and the ongoing US-China trade dispute.
The push to accelerate output hikes could negatively affect oil prices by increasing supply at a time when demand is weak and market oversupply concerns are already high.
"For today, oil prices are slightly up as the market responds to signs of easing tensions around Trump's tariffs and a potential shift in the Fed's policy stance, contributing to a broader market recovery," said LSEG senior analyst Anh Pham.
"On a weekly basis, however, prices are down as concerns over oversupply from OPEC+ persist, while the demand outlook remains uncertain amid ongoing trade tensions. A stronger U.S. dollar has also added pressure to crude prices," he added.
China is considering exempting some US imports from its 125% tariffs and is asking businesses to provide lists of goods that could be eligible in the biggest sign yet of Beijing's concerns about the economic fallout from the trade war.
Gold prices retreated on Friday after signs emerged that Beijing may be preparing to ease tariffs on select US imports, undermining the metal’s traditional appeal as a safe-haven asset amid geopolitical uncertainty.
Gold futures were down by 1% to $3,314.20 per ounce at the time of writing, while the spot price slipped 0.8% to trade at $3,309.68 an ounce.
The moves followed reports that China is considering exemptions for certain US goods from its steep 125% tariffs. Beijing has asked businesses to identify products that could qualify for relief, in what analysts see as the clearest indication yet of concern over the economic toll of the ongoing trade war.
The potential thaw in relations coincided with fresh assertions from US president Donald Trump that dialogue with Beijing is continuing. His comments came in response to Chinese statements suggesting no official talks had recently taken place.
"The partial rollback of tariffs on some imports from China may be perceived as a positive step towards further de-escalation in US-China trade tensions, which exert modest downward pressure on safe-haven assets like gold," said IG market strategist Yeap Jun Rong.
Despite Friday’s decline, gold remains sharply higher this year, buoyed by persistent global uncertainty and demand for defensive assets. The non-yielding metal, often viewed as a hedge against volatility, has climbed nearly $700 since January and hit a record high of $3,500.05 earlier this week.
The pound edged lower against the dollar in early European trading on Friday, shedding 0.2% to $1.3304, as investors grew increasingly cautious over the UK’s economic prospects following a renewed flare-up in global trade tensions.
Market sentiment was dampened by tariffs announced by Trump earlier this month, reigniting fears of a broader trade war that could weigh on global growth. The concerns were underscored by comments from Bank of England governor Andrew Bailey, who warned that rising protectionism poses a risk to the UK’s fragile recovery.
"We do have to take very seriously the risk to growth,” Bailey said at the sidelines of the International Monetary Fund’s (IMF) spring meetings on Wednesday and added "we’re currently working through that because we’ve got an interest rate decision coming in two weeks’ time”.
The US Dollar Index (DX-Y.NYB), which measures the greenback against a basket of six major currencies, rebounded slightly, up 0.2%, trading at 99.59. . The index had already recovered earlier in the week after Trump eased tensions by backing away from threats to dismiss Federal Reserve chair Jerome Powell and adopting a more conciliatory tone on China.
“Global equities are slightly lower this morning as China’s commerce ministry said that any reports of development in talks with the US are groundless,” said Noah Buffman, a strategist at CIBC Capital Markets.
Elsewhere in currency markets, the pound was muted against the euro, trading at €1.1702.
In broader market movements, the FTSE 100 (^FTSE) was muted on Friday, at 8,407.88 points at the time of writing. For more details, check our live coverage here.
