Oil Steady as Trade Hopes Build
(Bloomberg) -- Oil was steady as investors weighed expectations for swelling American crude stockpiles against signs of U.S.-China trade progress.
Futures in New York and Brent crude in London were little changed after falling the past two days. U.S. crude inventories probably rose for a sixth time through the week ended Oct. 18, the longest run of gains in almost a year, according to a Bloomberg survey before government data on Wednesday. President Donald Trump said China has indicated talks on a trade deal are advancing, offering a glimmer of hope for global demand.
Oil has slid from an April peak as the dispute between Beijing and Washington dented demand and as U.S. crude inventories expanded above their five-year seasonal average. The impact of the trade war is responsible for about 70% of the price decline, while the rest is a result of abundant supply, according to Bloomberg Economics, predicting the trend will continue next year.
“The oil market is listless and range-bound,” said John Driscoll, chief strategist at JTD Energy Services Pte in Singapore. It’s facing macroeconomic headwinds, weaker fundamentals and onerous tanker freight rates, he said.
West Texas Intermediate for November delivery, which expires Tuesday, fell 8 cents to $53.23 a barrel on the New York Mercantile Exchange as of 7:42 a.m. in London. The more-active December contract fell 16 cents to $53.35.
Brent for December settlement lost 9 cents to $58.87 on the London-based ICE Futures Europe Exchange after closing 0.8% lower on Monday. The global benchmark crude traded at a $5.51 premium to WTI for the same month.
U.S. crude stockpiles are expected to increase by 3 million barrels, according to the median estimate of 11 analysts surveyed by Bloomberg. If confirmed by the Energy Information Administration, it would be the longest run of gains since November. Industry data is due later Tuesday.
Trump said Monday he hopes to sign a trade deal at a summit in Chile next month, while U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will speak with their Chinese counterparts on Friday. Policy makers in China are preparing for two key meetings in the coming weeks with fresh evidence that economic growth, already at its lowest in almost three decades, will continue to slip.
--With assistance from James Thornhill and Ziad Daoud (Economist).
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