Adedapo Adesanya
By Adedapo Adesanya
Oil prices continued to get the stick circumstances surrounding the US-China trade deal which has affected global oil demand over the past 16 months. As a result of this, major futures depreciated from gains gathered during last week sessions into the second day of the week.
By implication, Brent crude, the international benchmark which traded above $63 last week continued its fall further on Tuesday as it shed 2.34 percent or $1.46 to trade at $60. 98 per barrel. The US West Texas Intermediate crude lost 1.7 percent or 2.98 percent to settle at $55.44 per barrel.
Business Post had reported on Tuesday morning that a Chinese government source said that there was pessimism in China about prospects for a trade deal and the long-running dispute between the world’s largest economies has affected economic growth prospects.
This decline in prices of crude oil also occurred over concerns about excess global crude supply.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, had earlier in the year agree to cut combined oil output by 1.2 million barrels per day that will run till March 2020.
However, sources show that Russia is unlikely to agree to deepen cuts in oil output at the December 5 – 6 meeting with fellow exporters in Vienna, but could commit to extend existing curbs to support Saudi Arabia, over worries about weak demand growth in 2020.
The prospect of a further increase in US crude inventories, suggesting ample supplies also led to the drop in prices of oil on Tuesday as this followed a rise in larger than expected rise in Norwegian oil production which also affected prices.
The American Petroleum Institute (API) is set to release its supply report at on Tuesday (yet to be released at press time) and the US government’s official figures are due to go public on Wednesday.
Oil may, however, trade lower or slightly higher on the outcome of this on Wednesday.
