TOKYO: U.S. oil prices fell for a second day on Tuesday, weighed down by uncertainty over whether U.S.-China trade talks are making much progress, while higher Saudi Arabian crude output reinforced concerns about oversupply.
U.S. West Texas Intermediate (WTI) crude was down 18 cents, or 0.3%, at $56.68 a barrel. The contract dropped 0.7% in the previous session.
Brent crude futures were down 14 cents, or 0.2%, at $62.04 a barrel by 0256 GMT, after falling 0.5% on Monday.
Worries about the impact on oil demand from the fallout of the 16-month U.S.-China trade war, which has weighed on global economic growth, have returned after doubts were cast on the chances of a so-called phase one agreement.
U.S. President Donald Trump said on Saturday that talks with China were moving along “very nicely” but the United States would only make a deal if it was the right one for Washington. He also there had been incorrect reporting about U.S. willingness to lift tariffs.
“Oil prices are struggling at the start of the week as trade concerns derail some of the momentum we saw in October that a phase one deal would deliver a boost for energy demand,” said Edward Moya, senior market strategist at OANDA.
Caution ruled in other markets ahead of a speech by Trump to the Economic Club of New York later in the day in case there was any new word on an agreement.
On the supply side, Saudi Arabia raised its oil output in October to 10.3 million barrels per day (bpd), although it kept its supplies to oil markets below its OPEC output target.
The Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, will probably extend a deal to limit crude supply but are unlikely to deepen their cuts, Oman’s energy minister said.
OPEC+, which has cut output by 1.2 million bpd since January under a deal set to last until March 2020, will next meet in early December.
Elsewhere, U.S. data showed that crude inventories at Cushing, the delivery point for WTI, fell about 1.2 million barrels in the week to Nov. 8, traders said, citing market intelligence firm Genscape.
Cushing inventories had grown for five weeks in a row through Nov. 1, according to government data.
Demand growth may pick up next after a year of dashed expectations amid the U.S.-China trade war, Fitch Solutions Macro Research analysts said in a new report.
“Our data show that 2019 will mark the nadir of oil demand growth over the next five years,” Fitch Solutions said.
“We forecast demand to (grow) by around 0.5% this year, rising to 0.8% in 2020,” the report said, although it added that “trade and political risks remain extremely elevated.” -Reuters
RIO DE JANEIRO, Nov 8 — Major global oil firms snubbed a second Brazilian oil auction in a row yesterday, passing up offshore blocks and forcing officials to reconsider a bidding system that gives a privileged position to state-run Petroleo…
NEW YORK: Oil prices fell on Wednesday after a much larger-than-expected build in U.S. crude inventories and after Reuters reported that the signing of a U.S.-China trade deal could be delayed until December.
The decline reversed the gains of the previous three sessions.
Brent crude was down $1.06, or 1.7%, to $61.90 a barrel by 2:07 p.m. EST (1907 GMT). West Texas Intermediate crude lost 74 cents, or 1.3%, to trade at $56.49 per barrel.
Prices extended losses after Reuters reported that a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December as discussions continue over terms and venue.
Earlier, prices dropped after data from the Energy Information Administration (EIA) showed U.S. crude inventories rose by 7.9 million barrels in the week to Nov. 1, compared with analysts’ expectations for an increase of 1.5 million barrels.
“This is definitely a shocking number, even if you’re bearish you’re shocked,“ said Phil Flynn, an analyst at Price Futures Group. “The only saving grace is the drawdown in gasoline supplies that put us below the five-year average, but that’s offset by the fact that the distillate inventories – even though they fell – they’re not as far below the five-year average as they were a week ago.”
Gasoline stocks dropped by 2.8 million barrels, compared with a forecast of a 1.8 million-barrel drop, and distillates, which include diesel and heating oil, lost 622,000 barrels, versus expectations for a decline of 949,000s, the EIA said.
A drop in crude exports and an increase in imports last week worsened the build, Flynn said.
Adding to pressures, the International Monetary Fund said euro zone economic growth was set to slow more than expected as the bloc’s manufacturing crisis could spill over to the larger services sector under global trade tensions.
Data on Wednesday showed Germany’s services sector barely grew in October, while euro zone business activity expanded slightly faster than expected but remained close to stagnation.
Middle East tensions offered some support. Iran started to inject uranium gas into centrifuges at an underground nuclear facility, further distancing itself from the 2015 nuclear deal between Tehran and world powers.
The United States pulled out of the nuclear pact last year and has imposed tough new sanctions on Iran.
“Alongside the continued rolling back of its nuclear commitments, the OPEC nation may be tempted to cause further supply disruptions in the Middle East in a bid to drive up prices,“ PVM analyst Stephen Brennock said. “Accordingly, conditions are ripe for tensions in the region to escalate and for the geopolitical risk premium to strike back with a vengeance.”
However, Russian Energy Minister Alexander Novak said the current oil price of more than $60 per barrel showed that markets were stable. – Reuters
RIO DE JANEIRO, Nov 7 — Brazil's biggest-ever oil auction frustrated expectations on yesterday, as high prices and the dominant role of state-run oil company Petrobras scared off global oil majors. Petroleo Brasileiro SA, as the Brazilian firm is…
RIYADH, Nov 1 — The third annual Saudi investment conference in Riyadh has drawn thousands of delegates, in a sign Saudi is emerging from the shadow of critic Jamal Khashoggi’s murder last October. Here is a pick of quotes from the final day of…
RIYADH, Oct 31 — Brazilian President Jair Bolsonaro said yesterday that he wants his country to join Opec, a move that would add the most significant new producer to the oil cartel for years but met with skepticism in Brazil's energy industry. The…
RIYADH, Oct 30 — The timing of the highly anticipated stock market debut of Saudi energy colossus Aramco will be dictated by de facto ruler Crown Prince Mohammed bin Salman, the kingdom’s energy minister said today. Aramco was expected to launch…
JAKARTA, Oct 23 — Indonesian President Joko Widodo unveiled his cabinet for a second term today, retaining Finance Minister Sri Mulyani Indrawati at the core of his economic team but also bringing in some new faces. Here are some of the main…
RIYADH, Oct 14 — Energy superpowers Saudi Arabia and Russia today signed a key deal to bolster cooperation among the world’s oil giants, as visiting President Vladimir Putin sought to defuse political tensions in the Gulf. Putin’s visit…
RIYADH, Oct 14 — Russian Energy Minister Alexander Novak said today there were no talks underway to change the global output deal under which Opec and non-Opec oil-producing countries have curbed output in order to support prices. Moscow is fully…