Global oil edges down on lack of details over trade deal
Traders are reluctant to push price further given very strong gains due to optimism on Friday, analyst says
Singapore — Oil prices eased on Monday as scant details on the first phase of a trade deal between the US and China undercut last week’s optimism over the thaw that helped to lift crude markets 2%.
Brent crude futures edged down 25 cents to $60.26 a barrel by 6.36am, while US West Texas Intermediate (WTI) crude futures was at $54.45 a barrel, down 25 cents.
Both contracts rose more than 3% last week, their first weekly gain in three.
“There is an argument that the oil market trading during US hours on Friday have already had a chance to price [in] the news on the trade dispute and the better outlook for global demand,” CMC Markets chief strategist Michael McCarthy said.
“So traders are reluctant to push it further given those very strong gains,” McCarthy said.
Most of the gains posted on Friday, however, had come after an Iranian oil tanker was attacked off Saudi Arabia’s coast in the Red Sea. Investigations are under way to determine if the tanker was hit by missiles, which could ratchet up tensions between Tehran and Riyadh if confirmed.
The emergence of a first-phase trade deal between the US and China and a goodwill move by Washington to suspend threatened tariffs on Chinese products also helped to lifted global financial markets on Monday.
But investors remained cautious, given that few details emerged from the talks.
“Traders view the deal in a tentative light…. This baby-step agreement could take weeks to iron out,” said Stephen Innes, Asia Pacific market strategist at AxiTrader in a note.
The trade war has pressured China’s trade, with its exports to the US falling 10.7% from a year earlier in dollar terms over January-September, Chinese customs spokesperson Li Kuiwen said.
China’s imports from the US have fallen 26.4% in dollar terms during the first nine months.
China’s demand for oil remains strong, with its September imports reflecting a 10.8% rise from a year earlier as refiners ramped up output amid stable profit margins and solid fuel demand.