By Adedapo Adesanya
Oil futures fell on the first day of the week on Monday, November 11, with speculations surrounding the US-China trade deal yielding pressures on prices.
The oil market, which had found much of its recent gains on the premise that the first phase of the US-China trade negotiations would be complemented soon, worried investors at Monday’s session.
As a result, Brent crude, the global benchmark, as at the time of this report on Monday night, was trading down 26 cents or 0.42 percent to settle at $62.25 per barrel. On the other hand, the US Crude, West Texas Intermediate (WTI), also depreciated by 34 cents or 0.59 percent at $56.90 per barrel.
Business Post reports that the two world’s largest economies have been at loggerheads for the past 16 months over tariffs placed on goods but settled for what would be a partial trade deal.
However, President of the United States, Mr Donald Trump, said on Saturday that the trade talks with China were moving along “very nicely” but that the US would only make a deal that was favourable for America.
Mr Trump also used the opportunity to correct the notion that reports of American willing to lift tariffs as part of the trade deal wwere incorrect. This was a big blow for oil prices, which had been looking good on this eventuality.
According to analysts, investors are also concerned about excess supplies of crude which has seen sharp rise as oil demand slowed.
Looking further, the outlook for next year may have upside potential, according to the Secretary-General of Organization of the Petroleum Exporting Countries (OPEC), Mr Mohammad Barkindo, following its 2019 oil outlook, suggesting that there would be no need to cut output further.
OPEC and its allies led by Russia are set to meet on December 5-6 in Vienna, Austria where there will be review of the policy agreed in January.
The OPEC+ alliance has since January 2019 agreed to cut production output by 1.2 million barrels per day under a deal set to run until March 2020.
As a result of this supply cut, demand for crude oil will be able to be checked making oil prices stable for producers but however compliance from members states have been a major issue.
Losses recorded on Monday could also be attributed to data which showed that crude inventories at Cushing, the delivery point for WTI, fell about 1.2 million barrels in the week to November 8.
Prices are expected to improve on Tuesday on the back of inventory data with the possibility of the Brent charting around to $62 per barrel and the WTI as high as $57.
