Adedapo Adesanya
By Adedapo Adesanya
Despite pointers showing oil prices were looking to continue gains in the new week, weak Chinese industrial data put a pin to hopes that the progress in the US-China trade deal will help increase oil demand. As a result of this, major futures depreciated from gains gathered during last week sessions.
At Monday’s trading session, the Brent crude oil fell by 0.75 percent or 46 Cents to trade at $61.27 per barrel, while US West Texas Intermediate crude lost 1.5 percent or 85 cents to settle at $55. 81 per barrel.
Prior to the release of the data, the Brent was already charting the $62 mark and was trading at $62.34, while the WTI was trading at the highest level since the Saudi attack at $56.92.
But this decline in prices put an end to a four-session gaining advantage, which rose as a result of an unexpected weekly drop in US crude inventories last week.
Oil suffered this hit as reports show profits at Chinese industrial companies fell again in October after dropping in September based on the US-China trade war tension and its effect on a slowing economy that has seen prices slip.
US President, Mr Donald Trump, had said that he was going to sign a part of the trade deal with China ahead of schedule but did not elaborate further and this led to
“We are looking probably to be ahead of schedule to sign a very big portion of the China deal, we’ll call it Phase One but it’s a very big portion,” he told reporters. Analysts also noted that an agreement between the world’s largest economies would provide a boost to global oil demand.
Also, looking at the supply side, US crude output has gone up to above 12 million barrels per day this year, thanks to gains from the Permian basin. This means that the United States has become the world’s largest oil producer ahead of Saudi Arabia and Russia.
Saudi Arabia led OPEC and and its allied producers, Russia, has since the beginning of the year implemented a deal to cut output by 1.2 million barrels per day to support the market until March 2020 and the producers meet to review policy on December 5 – 6 in Vienna, Austria.
The meeting will be crucial to determine if they must extend or modify an agreement on output cuts that ia due to expire next year to lend support to a market that has been shaken by global tension.
