Oil dips on concerns of delay in US-China trade deal until next year

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Reuters
KEY POINTS
  • Brent crude futures fell 20 cents, or 0.32%, to $62.20 a barrel by 0330 GMT. The international benchmark rose 2.5% on Wednesday.
  • West Texas Intermediate (WTI) crude futures dropped 17 cents, or 0.3%, to $56.84 per barrel. U.S. crude closed up 3.4% in the previous session.
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A man working in a filling station of Sinopec, China Petroleum and Chemical Corporation, in Shanghai, China, on March 22, 2018.
Johannes EIsele | AFP | Getty Images

Oil prices retreated on Thursday after gaining more than 2% in the previous session on bullish U.S. crude inventory data, as a fresh spat over fueled concerns of a further delay in any U.S.China trade deal.

The trade war between the world’s two biggest economies has hit global growth prospects and dominated the outlook for future oil demand.

Trade experts have warned the first phase of a trade deal could slide into next year, while markets are wary negotiations might take a hit as the U.S. House of Representatives passed two bills to back protesters in Hong Kong, much to the disapproval of China.

Brent crude futures fell 20 cents, or 0.32%, to $62.20 a barrel by 0330 GMT. The international benchmark rose 2.5% on Wednesday.

West Texas Intermediate (WTI) crude futures dropped 17 cents, or 0.3%, to $56.84 per barrel. U.S. crude closed up 3.4% in the previous session.

“Delays in signing the ‘phase one’ deal is yet another sign that Washington and Beijing remain poles apart when it comes to resolving their trade conflict,” said Abhishek Kumar, head of analytics at Interfax Energy in London.

“The Sino-U.S. trade war is already taking its toll on the world economy, which in turn will weigh on the growth in global oil demand.”

U.S. President Donald Trump said he is inclined to raise tariffs on Chinese imports if a trade deal is not reached.

A smaller-than-expected build in weekly U.S. inventories, however, propelled oil prices higher on Wednesday.

Crude stocks at the U.S. delivery hub of Cushing, Oklahoma fell by 2.3 million barrels, while U.S. crude stocks rose by 1.4 million barrels in the week to Nov. 15, compared with expectations for an increase of 1.5 million barrels, data from the Energy Information Administration showed.

“It was significantly lower than the 6 million barrels gain that API (American Petroleum Institute) data showed earlier in the week. However, it was a fall in stockpiles at the key pricing point of Cushing that drove prices higher,” ANZ Research said.

Russian President Vladimir Putin said on Wednesday Russia and OPEC have ‘a common goal’ of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal.

The Organization of the Petroleum Exporting Countries (OPEC) meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.

Oil prices extend losses on supply, trade war fears

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Reuters
KEY POINTS
  • West Texas Intermediate (WTI) crude futures erased early gains to be down 6 cents, or 0.1%, at $55.15 a barrel by 0631 GMT, after falling more than 4% over the previous two sessions.
  • Brent crude futures were at $60.71 a barrel, down 20 cents, or 0.3%. Brent dropped 3.8% during the prior two sessions.
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Oil field workers with Wisco work on a pump jack in North Dakota, the United States, on November 6, 2013.
Ken Cedeno | Corbis News | Getty Images

Oil prices slipped for a third day on Wednesday as a surge in U.S. stockpiles reinforced concerns about lackluster global economic growth, while hopes ebbed for any movement on the U.S.-China trade war.

West Texas Intermediate (WTI) crude futures erased early gains to be down 6 cents, or 0.1%, at $55.15 a barrel by 0631 GMT, after falling more than 4% over the previous two sessions.

Brent crude futures were at $60.71 a barrel, down 20 cents, or 0.3%. Brent dropped 3.8% during the prior two sessions.

Crude inventories in the United States, the world’s biggest oil user, rose 6 million barrels in the week to Nov. 15 to 445.9 million, data from industry group the American Petroleum Institute showed late on Tuesday.

The increase added to concerns about crude oversupply after Reuters reported that Russia, the world’s second-biggest producer, was unlikely to back deepening output cuts when the Organization of the Petroleum Exporting Countries (OPEC) meets on Dec. 5-6 in Vienna.

Russia and other oil producers have agreed with OPEC to cut 1.2 million barrels per day of output through March to bolster prices, a producer group known as OPEC+.

“The API data also showed U.S. inventories posted a rather robust increase last week, which if confirmed by the EIA report, we could see oil prices continue to slide,” said Edward Moya, an analyst at brokerage OANDA.

Official U.S. government inventory data from the Energy Information Administration is due at 10:30 a.m. EST (1530 GMT) on Wednesday.

U.S. crude demand has slowed during a protracted trade war with China. Hopes for an end to the dispute in the signing of a so-called Phase 1 agreement between the sides has dimmed amid disagreements over the removal of tariffs.

China on Wednesday also condemned legislation passed by the U.S. Senate aimed at protecting human rights in Hong Kong amid a crackdown on a pro-democracy protest movement.

″(The) fear here is still the trade talk with a lot of pessimism starting to filter through,” said Stephen Innes, market strategist at AxiTrader. “If we don’t get a significant roll-back on tariffs, that’s quite negative.”

Japanese exports tumbled at their quickest pace in three years in October, threatening to tip the trade-reliant economy into recession because of weakening demand from the United States and China.

“Recent weak economic data suggested a global cyclical slowdown has yet to (show) a bottom sign, and thus demand outlook is going to remain soft,” said Margaret Yang, market analyst at CMC Markets.

Crude imports by Japan, the world’s fourth-largest oil buyer, fell 1.3% in October versus a year ago.

Oil eases amid concern over US-China trade talks dragging on

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Reuters
KEY POINTS
  • West Texas Intermediate (WTI) crude dropped 27 cents or 0.47% to $56.78 a barrel by 0549 GMT, slipping further away from an eight-week high hit last Friday when hopes for the trade deal rose.
  • Brent crude futures were down 20 cents, or 0.32%, at $62.24.
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Workers extracting oil from oil wells in the Permian Basin in Midland, Texas on May 1, 2018.
Benjamin Lowy | Getty Images

U.S. oil prices fell for the second straight day on Tuesday amid market jitters over limited progress between China and the United States on rolling back trade tariffs, while rising U.S. inventories also jangled nerves.

West Texas Intermediate (WTI) crude dropped 27 cents or 0.47% to $56.78 a barrel by 0549 GMT, slipping further away from an eight-week high hit last Friday when hopes for the trade deal rose.

Brent crude futures were down 20 cents, or 0.32%, at $62.24.

A Chinese government source was quoted by broadcaster CNBC on Monday as saying there was gloom in Beijing about prospects for a trade deal, with Chinese officials troubled by U.S. President Donald Trump’s comment that there was no agreement on phasing out tariffs.

“We had reports overnight that the mood in Beijing was pessimistic,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney.

“The lack of announcement is really concerning for the demand outlook … the market is very nervous about the trade talks.”

The lingering trade battle that has seen the world’s two biggest economies impose tit-for-tat tariffs on each other has hit global growth prospects and clouded the outlook for future oil demand.

Meanwhile a preliminary Reuters poll on Monday showing U.S. crude oil stockpile were seen rising for the fourth straight week also squeezed prices.

The American Petroleum Institute is scheduled to release its data for the latest week at 4:30 p.m. EDT (2030 GMT) on Tuesday, while the Energy Information Administration’s official weekly report is due on Wednesday.

“Unless we get further concrete signs of global growth rally or an extension in production cuts by OPEC+ (the Organization of the Petroleum Exporting Countries and associated producers including Russia), WTI will struggle to attempt to recapture the $60-a-barrel mark,” said Edward Moya, senior market analyst at OANDA in New York.

One possible factor supporting prices going forward was a renewal in geopolitical tensions, with news from Dubai that armed members of Yemen’s Iran-aligned Houthi movement had seized a vessel towing a South Korean rig at the southern end of the Red Sea over the weekend.

Oil prices steady after last week’s gains, look to US-China talks

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Reuters
KEY POINTS
  • Brent crude futures were at $63.30 a barrel at 0512 GMT, unchanged from the previous session. The contract rose 1.3% last week.
  • West Texas Intermediate (WTI) crude were also unchanged at $57.72 a barrel, having gained 0.8% last week.
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An employee holds a control panel as barrels are filled with lubricant oil in Torzhok, Russia, on March 21, 2014.
Andrey Rudakov | Bloomberg | Getty Images

Oil prices were little changed on Monday following steady gains in the previous week with investors awaiting fresh clues over prospects for a trade deal between the United States and China, shrugging off concerns over steadily rising oil supplies.

Brent crude futures were at $63.30 a barrel at 0512 GMT, unchanged from the previous session. The contract rose 1.3% last week.

West Texas Intermediate (WTI) crude were also unchanged at $57.72 a barrel, having gained 0.8% last week.

The “crude oil market is flat on Monday morning, as price consolidates after Friday’s big rally,” said Margaret Yang, market analyst at CMC Markets.

Oil futures gained nearly 2% on Friday as comments from a top U.S. official raised optimism for a U.S.-China trade deal, but worries about increasing crude supplies capped prices.

The 16-month trade war between the world’s two biggest economies and oil consumers has slowed growth around the world and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.

China and United States had “constructive talks” on trade in a high-level phone call on Saturday, state media Xinhua said, but offered few other details in a report released on Sunday.

“In the short term, U.S.-China trade talks and OPEC meeting in early December are the two biggest events oil traders are watching for,” said Yang.

The Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it expected demand for its oil to fall in 2020, supporting a view among market participants that there is a case for the group and other producers like Russia — collectively known as ‘OPEC+’ — to maintain limits on production that were introduced to cope with a supply glut.

OPEC and its allies are expected to discuss output policy at a meeting on Dec. 5-6 in Vienna. Their existing production deal runs until March.

A monthly report from the International Energy Agency (IEA) released on Thursday put downward pressure on prices, after it estimated that non-OPEC supply growth would increase to 2.3 million barrels per day (bpd) next year compared, with 1.8 million bpd in 2019, citing production from the United States, Brazil, Norway and Guyana.

Data released on Thursday also showed weekly U.S. crude stockpiles grew by 2.2 million barrels, the Energy Information Administration (EIA) said, exceeding the 1.649 million-barrel rise forecast by analysts in a Reuters poll.

Oil gains as hopes build for OPEC supply curbs, new optimism on US-China trade deal

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Reuters
KEY POINTS
  • Brent crude futures were up 28 cents, or 0.5%, at $62.56 a barrel by 0441 GMT, having dropped 9 cents on Thursday.
  • West Texas Intermediate crude was up 28 cents, or 0.5%, at $57.05 a barrel, after falling 0.6% in the previous session.
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Employees pass beneath pipes leading to oil storage tanks in Russia on February 4, 2014.
Andrey Rudakov | Bloomberg | Getty Images

Oil prices rose on Friday as OPEC’s outlook for oil demand next year fueled hopes that the producer group and its associates will keep a lid on supply when they meet to discuss policy on output next month.

Optimism that the United States and China could soon sign an agreement to end their trade war also seeped into the market after White House economic adviser Larry Kudlow said a deal was “getting close,” citing what he called very constructive discussions with Beijing.

Brent crude futures were up 28 cents, or 0.5%, at $62.56 a barrel by 0441 GMT, having dropped 9 cents on Thursday.

West Texas Intermediate crude was up 28 cents, or 0.5%, at $57.05 a barrel, after falling 0.6% in the previous session.

The rosy mood came after the Organization of the Petroleum Exporting Countries (OPEC) said on Thursday it expected demand for its oil to fall in 2020.

Many analysts said that supports the view among markets that there’s a clear case for the group and other producers like Russia — collectively known as ‘OPEC+’ — to maintain limits on production that were introduced to cope with a supply glut.

But such a move may backfire, according to Jonathan Barratt, chief investment officer at Probis Group.

“There’s no reason to extend the cuts, we all know the economies are softening,” he said. “If you push prices higher it is going to hurt everyone and even if it doesn’t, it’s only going to play into the U.S. producers’ hands.”

OPEC+ on Jan. 1 cut output by 1.2 million barrels per day (bpd), and in July, the alliance renewed the pact until March 2020.

OPEC said demand for its crude would average 29.58 million barrels per day next year, 1.12 million bpd less than in 2019. That points to a 2020 surplus of about 70,000 bpd, which is less than indicated in previous reports.

The producer group will meet in Vienna next month.

In the U.S., production keeps rising although there was a bigger-than-expected increase in U.S. stockpiles and rising production last week, something that would often lead investors to sell.

Crude production rose by 200,000 bpd to a weekly record of 12.8 million bpd, the EIA said in its weekly report.

U.S. crude inventories grew last week by 2.2 million barrels, the Energy Information Administration said, exceeding the 1.649 million-barrel rise forecast by analysts in a Reuters poll.