Oil prices set to drop for a second week over US-China trade war concerns

Oil prices rose on Friday after settling more than $2 a barrel lower in the previous session, but were set to drop for a second straight week on concerns over a prolonged trade war between the United States and China.

Brent futures rose 90 cents, or 1.4%, to $64.23 a barrel by 0646 GMT, while U.S. West Texas Intermediate crude futures rose 88 cents, or 1.5%, to $60.95.

Brent is set to fall 2.1% this week, while WTI is on track to decline 1.8%. Both benchmarks declined 11% in the previous week.

A prolonged dispute between the world's two biggest economies is likely to reduce global trade volumes and disrupt trading routes, and eventually weigh on global economic growth.

"We expect prices will remain under pressure as investors assess ongoing trade negotiations and rising tensions between Washington and Beijing," BMI analysts said in a note on Friday.

Concerns about a global economic slowdown were also putting oil prices under pressure, Daniel Hynes, senior commodity strategist at ANZ, said in a note.

The bank forecasts oil consumption to decline by 1% if global economic growth falls below 3%, Hynes said.

U.S. President Donald Trump raised tariffs against China to 145% on Thursday, even after announcing a pause on heavy tariffs against dozens of trading partners earlier this week. China, in turn, has announced an additional import levy on U.S. goods.

The U.S. Energy Information Administration on Thursday lowered its global economic growth forecasts and warned that tariffs could weigh heavily on oil prices, as it slashed its U.S. and global oil demand forecasts for this year and next year.

BMI analysts said the OPEC+ meeting on May 5 could prove decisive, signalling appetite to intervene in support of market stability.

"The announcement of additional supply growth at the next meeting would likely be a trigger for a renewed selloff," the analysts said.