Oil fell on Monday as concerns about economic growth combined with signs of ample global supplies pressured prices, outweighing bullish signals from Europe, where fears of an economically damaging no-deal Brexit have eased.
Global benchmark Brent crude was down 57 cents at $58.85 (Sh6,061) a barrel by 0944 GMT. US West Texas Intermediate crude oil declined 39 cents to $53.39 a barrel.
US and Chinese trade negotiators are working on nailing down a Phase 1 trade deal text for their presidents to sign next month, hoping to resolve a trade war that has rumbled on over the last year, slowing global economic growth.
But adding to tensions, China is now seeking $2.4 billion (Sh247 billion) in retaliatory sanctions against the United States for non-compliance with a WTO ruling in a tariffs case dating back to the Obama era, a published document showed.
“A rebound in upside potential looks unlikely at this stage given that bullish catalysts are in short supply,” said Stephen Brennock of oil broker PVM. “Only a meaningful U.S.-China trade agreement or deeper OPEC cuts will change the negative status quo, neither of which seem to be forthcoming.”
The Organisation of the Petroleum Exporting Countries, Russia and other oil producers, an alliance known as OPEC+, agreed in December to cut supply by 1.2 million barrels per day (bpd) from the start of this year. Russia, the world’s second-largest oil producer, said on Sunday it did not meet its supply reduction commitment in September because of an increase in natural gas condensate output as the country prepared for winter.
Additionally, talks between OPEC members Kuwait and Saudi Arabia to resume oil production from joint fields in the Neutral Zone between the two countries, with capacity of 500,000 barrels per day, could mean more supply returning to the market. China’s economic growth slowed to six per cent year-on-year in the third quarter, its weakest in 27-1/2 years. However, a 9.4 per cent year-on-year increase in China’s refinery throughput for September signalled that petroleum demand remained robust.
“This level of crude intake would imply that every province had simultaneously processed close-to-record volumes of crude based on their historical regional reporting,” JBC analysts said in a note.