Oil trades below US$63 as investors size up US-China trade battle

Singapore

OIL'S decline slowed after prices fell to an almost three-week low as investors continued to evaluate the potential impact of an escalating trade conflict between the US and China.

Futures in New York traded below US$63 a barrel after dropping 4.4 per cent last week. While US President Donald Trump predicted the Asian giant will be the first to buckle as the world's two largest economies teeter on the brink of a trade war, a speech by China's President Xi Jinping at a conference on Tuesday may shed some light on his plans.

Meanwhile, money managers slashed bets on rising West Texas Intermediate crude by the most since August, while short-selling surged.

Oil is losing steam after rising more than 5 per cent last month as Mr Trump repeatedly raised the stakes against China, rattling markets in recent weeks.

Along with other risky assets, oil took a blow on concern that the escalating tension will threaten growth that drives energy demand amid record US output, hindering efforts of the Organization of Petroleum Exporting Countries and its allies to curb a global glut and prop up prices.

WTI for May delivery traded 17 cents higher at US$62.23 a barrel on the New York Mercantile Exchange at 8.23am in London. Prices fell 2.3 per cent to US$62.06 on Friday, the lowest close since March 19. Total volume traded was about 15 per cent above the 100-day average.

Brent for June settlement was up 24 cents to US$67.35 a barrel on the London-based ICE Futures Europe exchange. The contract dropped US$1.22, or 1.8 per cent, to US$67.11 on Friday. The global benchmark crude traded at a US$5.08 premium to June WTI.

Futures for September delivery were little changed at 402.3 yuan a barrel on the Shanghai International Energy Exchange. The exchange was closed on Thursday and Friday for Chinese holidays.

Adding bearishness to the market, hedge funds cut their WTI net-long position - the difference between bets on a price increase and wagers on a drop - by 9.4 per cent in the week ended April 3, according to the US Commodity Futures Trading Commission.

Longs fell 7.4 per cent as funds shed the largest number of bullish bets in almost a year, while shorts jumped the most since August.

In other oil-market news: The number of drilling rigs targeting oil in the US increased by 11 to 808 last week, the highest since March 2015, according to Baker Hughes data on Friday.

Saudi Arabia signalled its intent to expand chemical production along the US Gulf Coast and potentially double the size of North America's biggest oil refinery. BLOOMBERG