Oil prices decline after Saudi support, trade concerns

July 2 (UPI) -- Oil prices declined in early Monday trading after a weekend of energy security statements from Saudi Arabia and concerns about the fallout of trade tensions.

Canada marked a national holiday Sunday with reciprocal trade actions on the United States, imposing tariffs on about $12.5 billion worth of U.S. goods. Canadian Foreign Minister Chrystia Freeland said in a weekend statement that tariffs imposed by the United States so far were protectionist and illegal.

"It is with regret that we take these countermeasures, but the U.S. tariffs leave Canada no choice but to defend our industries, our workers and our communities, and we will remain firm in doing so," she said.

Canada is one of the largest steel suppliers to the United States. Ed Longanecker, the president of the Texas Independent Producers & Royalty Owners Association, told UPI during the weekend the U.S. tariff on imported steel was a job killer.

"This will ultimately result in fewer wells being drilled, a net loss of American jobs, lost tax revenue and a slowdown in energy infrastructure investment," he said.

U.S. trade actions against China and the European Union sparked concern about a global trade war that could undermine economic growth and crimp future demand.

The price for Brent crude oil, the global benchmark for the price of oil, was down 0.92 percent as of 9:13 a.m. EDT to $78.50 per barrel. West Texas Intermediate, the U.S. benchmark, was down 0.27 percent to $73.95 per barrel.

The loss follows last week's 5 percent jump in the price for Brent. The price for oil has been supported by concerns about an oil supply deficit in the second half of the year brought on by lingering issues in Venezuela, conflict-related outages in Libya and potential shortages from Iran, all three of which are members of the Organization of Petroleum Exporting Countries.

OPEC ministers in late June vowed to put more oil on the market in the second half of the year, but the pledge was still short of the possible deficit. U.S. President Donald Trump turned to Twitter during the weekend to call on Saudi Arabia to open the spigot.

Phil Flynn, the senior market analyst for the PRICE Futures Group in Chicago, said in a daily emailed newsletter that extra oil from Saudi Arabia would be a short-term fix and only heighten concerns about the looming market deficit.

"Spare oil production capacity is already at a historic low," he said.

Elsewhere, traders may be assessing the victory for Andrés Manuel López Obrador in Mexico's presidential elections during the weekend.

Ixchel Castro, a manager of Latin America oil and refining markets at consultant group Wood Mackenzie, said in an emailed statement the new administration could help stimulate the Mexican energy sector.

"This administration stands to reap the rewards of the reforms -- increased production, private investment and job creation -- but this will require strong backing from both the incoming administration and government coalition support," she said.