Oil loses ground on little development in US-China trade deal
Brent crude slides 0.3% as concerns grow about a supply glut in 2020
Tokyo — Crude oil futures fell on Friday amid lingering uncertainty on whether, and when, the US and China will agree a long-awaited deal to end their bitter trade dispute, the gloom compounded by rising crude inventories in the US.
Brent crude, the global benchmark, was down 16c, or 0.3%, at $62.13 (R916) a barrel by 2.59am GMT, after gaining 0.9% in the previous session.
US West Texas Intermediate (WTI) crude was down 23c, or 0.4%, at $56.92 a barrel. The contract rose 1.4% on Thursday.
The trade war between the world's two biggest economies has slowed economic growth around the world and prompted analysts to lower forecasts for oil demand, raising concerns that a supply glut could develop in 2020.
On Thursday, the Chinese commerce ministry said the two countries have agreed in the past two weeks to cancel trade tariffs in different phases, without giving a timeline.
But that comment was shrouded in doubt soon after when Reuters reported that the plan faces stiff internal opposition in the US administration.
“Oil is in pause mode as traders await more details on the trade talks,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.
Also concentrating minds among sector watchers were remarks by Organization of the Petroleum Exporting Countries (Opec) secretary-general Mohammad Barkindo this week that he was more optimistic about the outlook for 2020 because of potentially positive developments on trade disputes, appearing to downplay any need to cut output more deeply.
A deal between Opec and allies, such as Russia, is limiting supplies until March 2020. The producers meet on December 5-6 in Vienna to review that policy.
Barkindo’s comments are “spooking the market, especially in the face of the seemingly never-ending run of US inventory builds,” said Innes.
US crude oil stockpiles rose sharply last week as refineries cut output and exports dropped, while refined products extended a multi-week drawdown, the Energy Information Administration (EIA) said on Wednesday.
Stocks at the Cushing, Oklahoma, delivery hub for WTI rose by 1.7-million barrels, the EIA said.