By Adedapo Adesanya
Oil prices shed their two-month high gains on Friday as uncertainties over the United States trade talks with China overshadowed expectations of an extension to OPEC+ production cuts.
As at 9 p.m. Nigerian Time (GMT +1) on Friday, the Brent crude futures, which rose to $64 on Thursday, went down by 38 Cents or 0.59 percent to trade at $63.59 per barrel.
In the same vein, the US West Texas Intermediate (WTI) crude was also down, however, by 60 Cents, or 1.02 percent to sell at $57.98 per barrel, having traded close to $60 per barrel sometime on Friday morning.
The global market, which has been swayed by the US-China trade deal, was affected as it looked like it might not pull through.
The latest concerns occurred as Chinese President Xi Jinping on Friday said his country wants to work out an initial trade pact with the United States and has been trying to avoid a trade war but is not afraid to retaliate when necessary.
On Thursday, Business Post reported that the Chinese had invited US negotiators to Beijing on its part to curb any further misunderstanding between the two world powers.
Prices rose to their highest since the September Saudi Aramco oil attacks to their highest on Thursday following reports that the Organization of the Petroleum Exporting Countries (OPEC) and Russia are likely to extend existing production cuts by another three months to mid-2020 when they meet December 5-6 in Vienna.
The group has also said it will emphasise the need for stricter deal compliance from the likes of Iraq and Nigeria who are not fulfilling the end of the January deal.
According to oil brokerage PVM, “A disciplined approach from Iraq and Nigeria should shave off another 300-400,000 barrels per day (bpd) from the groups production level leading to a balanced market in the first half of 2020 and to a possible supply deficit in the second half.”
The cartel, which had cut production output by 1.2 million barrels per day to its members in a deal that would run till March 2020, has found that Iraq and Nigeria were not abiding based on internal unrest.
However, recently there were talks that the producers won’t push for deeper oil supply cuts when they meet next month in Vienna on December 5 and 6 to review the policy.
It was said that the member states and allies may stick to their current output targets and encourage producers to comply more fully with those targets.
Oil prices took a crack again when reports showed the biggest drawdown for three months in US crude stock stockpiles at Cushing, Oklahoma, the delivery point of the US WTI.
Dipo Olowookere