Picture: REUTERS
Picture: REUTERS

London — Oil prices fell more than 1% on Thursday due to the lack of any clear resolution to US-China trade talks and official data that again indicated vast fuel stocks in the US.

US West Texas Intermediate (WTI) crude oil futures were at $51.66 a barrel at 9.50pm GMT, down 70c, or 1.3%, from their last settlement. International Brent crude futures were also down 1.3%, or 79c, at $60.65 a barrel.

Both benchmarks rose by about 5% the previous day, capping off a week-long climb that marked oil’s longest sustained rise since last summer. 

Global financial markets had surged on hopes that Washington and Beijing may soon end their dispute and avert an all-out trade war between the two biggest economies. Some of the positive feeling ebbed on Thursday, however, a day after negotiations wrapped up with mildly positive statements from both sides but few details.

The US trade representative’s offices said in a statement on Wednesday that the two sides discussed “ways to achieve fairness, reciprocity and balance in trade relations”. China’s commerce ministry said the talks “established a foundation for the resolution of each others’ concerns”.

Vandana Hari of consultancy Vanda Insights in Singapore said oil prices dropped “as optimism, fulled by the US-China trade talks earlier in the week, appeared to have run its course, and official statements after the conclusion of three days of negotiations, while indicating modest progress, lacked details”.

Meanwhile, US bank Morgan Stanley cut its 2019 oil price forecasts by more than 10% on Wednesday, pointing to weakening economic growth expectations and rising oil supply, especially from the US.

The bank now expects Brent to average $61 a barrel this year, down from a previous estimate of $69, and US crude to average $54, against a prior forecast of $60. The main source of new supply is the US, where crude oil production remained at a record 11.70-million barrels per day (bpd) in the week ended January 4, the Energy Information Administration (EIA) said on Wednesday.

This has resulted in swelling fuel inventories. The surge in US production runs counter to efforts led by oil cartel Opec to cut supply and rein in an emerging glut. Said Morgan Stanley,  “Balancing the market would require Opec discipline to continue well into 2020.”