Oil Price Fundamental Daily Forecast – Pressured by Trade Talk Snag; Worries Over Increasing Supply
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Monday, but inside Friday’s range. The price action suggests investor indecision and impending volatility. The catalyst behind the move is renewed concerns over U.S.-China trade relations after President Trump appeared to downplay reports of an imminent lifting of tariffs in a protracted trade war between the two economic powerhouses.
At 12:26 GMT, December WTI crude oil is trading $56.52, down $0.73 or -1.28% and January Brent crude oil is at $61.87, down $0.64 or -1.02%.
CNBC is reporting that Trump said on Saturday that trade talks with China were moving along “very nicely” but the United States would only make a deal with Beijing if it was the right one for America.
Trump also said there had been incorrect reporting about U.S. willingness to lift tariffs as part of a “phase one” agreement, news of which had boosted markets.
It was reported on Friday that Trump said he has not agreed to scrap tariffs on Chinese goods, dampening hopes about a coming resolution to the trade war. “They’d like to have a rollback. I haven’t agreed to anything,” he told reporters before departing the White House on his way to Georgia. “China would like to get somewhat of a rollback, not a complete rollback because I know I won’t do it.”
Trump’s comments were in reference to remarks from Chinese Commerce Ministry spokesperson Gao Feng who said Thursday that negotiators from Washington and Beijing “agreed to remove the additional duties imposed on each other’s products in different phases after they make progress” in striking a trade deal, according to a CNBC translation.
Other News
U.S. energy firms last week reduced the number of oil rigs operating for a third week in a row as producers cut spending on new drilling, even though most are still increasing output as they benefit from efficiency gains.
Drillers cut seven oil rigs in the week to November 8, bringing the total count down to 684, the lowest since April 2017, General Electric Co.’s Baker Hughes energy services firm said in its closely followed report on Friday.
Daily Forecast
Prices are under pressure because of uncertainty over the trade deal. When there’s uncertainty, investors sell first and ask questions later. The markets could drift sideways to lower until traders are once again satisfied with the progress in the trade talks.
In the meantime, the markets could feel additional pressure later in the week if the U.S. Energy Information Administration report on Wednesday shows another rise in supply.
This article was originally posted on FX Empire
