Oil Set for Biggest Weekly Loss in a Month



Oil Set for Biggest Weekly Loss in a Month
Oil headed for its biggest weekly loss in a month as swelling American stockpiles and renewed doubts over a long-term trade deal between the U.S. and China suggested supply will keep outpacing demand.

(Bloomberg) -- Oil headed for its biggest weekly loss in a month as swelling American stockpiles and renewed doubts over a long-term trade deal between the U.S. and China suggested supply will keep outpacing demand.

Futures edged higher in New York on Friday, but are down 4.1% this week. Chinese officials are warning they won’t budge on the thorniest issues and are wary of President Donald Trump’s impulsiveness even as the two sides get close to signing an initial agreement, people familiar with the matter said. U.S. crude inventories rose by more than forecast last week and a JBC Energy report showed Saudi Arabian production rebounded to normal levels in October.

Ample physical oil supplies at a time when the trade war is sapping global economic growth are putting pressure on the Organization of Petroleum Exporting Countries and allies to reduce output further to prop up prices. However, signs that Russia is wary of more cuts, may mean Saudi Arabia and the Gulf states will have to go it alone.

“As we head toward the end of the year, we’ll see stronger downward pressure on oil mainly driven by sluggish global growth,” said Kim So Hyun, a commodities strategist at Daishin Securities Co. in Seoul. The chances of a rebound are slim, unless OPEC makes deeper output cut at its December meeting, she said.

West Texas Intermediate crude for December delivery rose 13 cents, or 0.2%, to $54.31 a barrel on the New York Mercantile Exchange as of 6:45 a.m. in London. The contract lost 1.6% on Thursday, just managing to eke out an 0.2% gain for October.

Brent for January was steady at $59.63 a barrel on the London-based ICE Futures Europe Exchange. The December contract dropped 0.6% as it expired on Thursday. The global benchmark crude traded at a premium of $5.26 to WTI for the same month.

The “phase one” deal between the U.S. and China is meant, according to the Trump administration, to lead to a more comprehensive agreement involving more substantive economic reforms. But Chinese officials are skeptical, saying that would require the U.S. to withdraw tariffs in place on some $360 billion in imports from China -- something many don’t see Trump being ready to do.

U.S. crude inventories rose by 5.7 million barrels last week, according to Energy Information Administration data, exceeding the median estimate in a Bloomberg survey for a 500,000-barrel gain. Saudi Arabian production rebounded to 9.83 million barrels a day in October, up from 8.7 million in September amid the attacks on the kingdom’s facilities, JBC said.

To contact the reporter on this story:
Heesu Lee in Seoul at hlee425@bloomberg.net

To contact the editors responsible for this story:
Serene Cheong at scheong20@bloomberg.net
Andrew Janes



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