Oil Holds Losses on Bearish Headwinds
(Bloomberg) -- Oil held losses near a two-month low on pessimism over the global economic outlook and as American crude inventories expanded more than expected.
Futures were little changed in New York after contrasting headlines on the U.S.-China trade whipsawed markets earlier. Oil lost as much as 2.3% after a report that deputies had made no progress in talks and that the Beijing delegation would leave early, before paring most of those losses on a separate report that there was no change in the travel schedule. American crude stockpiles gained for a fourth straight week, contributing to ample global supply.
Oil has now slumped more than 16% since just after the mid-September attacks on Saudi Arabia as the kingdom quickly restored production and investors turned their attention to the global economic slowdown. The trade war is denting the demand outlook, with the heads of major traders including Vitol SA saying they see prices in the $50s a year from now.
While the volatile price-action this morning reflected the news flow, declines in prices have been pretty small this week, said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty in Sydney. That could indicate oil is already at the bottom of its trading range and that positive news could drive it back up, he said.
West Texas Intermediate for November delivery fell 7 cents to $52.52 a barrel on the New York Mercantile Exchange as of 2:04 p.m. Singapore. The contract lost 4 cents to close at $52.59 on Wednesday.
Brent for December settlement dropped 6 cents, or 0.1%, to $58.26 a barrel on the London-based ICE Futures Europe Exchange. It rose 8 cents to $58.32 on Wednesday. The global benchmark crude traded at a $5.72 premium to WTI for the same month.
The prolonged spat between Beijing and Washington has sapped global demand, with Citigroup Inc. predicting last month that oil consumption growth has almost halved. China’s top trade negotiator will stay in the U.S. through Friday for meetings, according to people with knowledge of the matter. The White House is also weighing a currency pact with China as part of a partial deal.
U.S. crude stockpiles increased by 2.93 million barrels last week, according to the Energy Information Administration. The median estimate in a Bloomberg survey of analysts forecast a 1.9-million barrel draw. American oil production climbed to a record 12.6 million barrels a day.
To contact the reporters on this story:
Elizabeth Low in Singapore at firstname.lastname@example.org;
Heesu Lee in Seoul at email@example.com
To contact the editors responsible for this story:
Serene Cheong at firstname.lastname@example.org
Ben Sharples, Andrew Janes
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.