Oil & Gas
Oil Holds Two Days of Losses as Demand Outlook Deteriorates
(Bloomberg) –Oil held two days of losses as a worsening demand outlook was compounded by signs it will be difficult for the U.S. and China to reach even a limited trade agreement.
Futures in New York edged higher after dropping 3.5% over the previous two sessions. Beijing wants a rollback in tariffs before it agrees to buy as much as $50 billion of U.S. agriculture products that President Donald Trump claims are part of an initial deal, people familiar with the matter said. China also threatened to retaliate if the U.S. Congress passes a law on Hong Kong.
The International Monetary Fund cited a broad deceleration across the world’s largest economies as it cut its growth forecast for 2019 to the lowest in a decade on Tuesday, and also lowered its projection for next year. Elevated tanker costs are causing some Asian refiners to hold off from spot purchases and consider run cuts, while the Energy Information Administration said it sees an increase in U.S. drilling in November.
“Continued worries over global growth will ensure that any oil rallies are limited in scope,” said Jeffrey Halley, a senior analyst at Oanda Asia Pacific Pte. The only things that would cause a structural rise in prices over the longer term are a U.S.-China trade deal, which is unlikely, or OPEC+ agreeing to much deeper production cuts, he said.
West Texas Intermediate for November delivery rose 16 cents, or 0.3%, to $52.97 a barrel on the New York Mercantile Exchange as of 11:14 a.m. in Singapore. It fell 1.5% on Tuesday.
Brent crude for December settlement climbed 0.4% to $58.95 a barrel on the London-based ICE Futures Europe Exchange after falling 1% on Tuesday. The global benchmark traded at a $5.88 premium to WTI for the same month.
China’s bid for a rollback in existing tariffs highlights how far apart Washington and Beijing remain, even after reaching the handshake accord touted by the U.S. last week. The Congress bill on Hong Kong would require an annual review of whether the territory is sufficiently autonomous from Beijing to justify its special trading status.
The EIA sees output at major U.S. shale plays rising by 58,000 barrels at day to 8.97 million barrels in November for the month before. It’s also due to release American crude stockpiles data on Thursday, with analysts forecasting a 3 million barrel increase last week.
–With assistance from James Thornhill and Vince Golle.
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