HOUSTON: Oil prices fell more than 1 per cent on Monday, erasing much of last week’s gains and tumbling alongside US stocks on uncertainty over a trade deal between the United States and China.
Brent crude futures settled at US$62.44 a barrel, down 86 cents, or 1.4 per cent. West Texas Intermediate (WTI) crude ended 67 cents, or 1.2 per cent, lower at US$57.05 a barrel. Both benchmarks posted their second straight weekly gain last week, with Brent rising 1.3 per cent and WTI up 0.8 per cent, report agencies.Wall Street’s three main stock indexes also fell from last week’s record highs following a report that stoked concerns a US-China trade deal might not get through, which pushed oil prices lower, analysts said.
“Crude has become highly reactive to whichever way the wind is blowing in the (US-China) trade talks. When it falters, prices get punished,” said John Kilduff, a partner at Again Capital LLC in New York. “This headwind of slack demand growth keeps holding us back.”
The 16-month trade war between the world’s two biggest economies has slowed global growth, prompting analysts to lower forecasts for oil demand growth and raising concerns that a supply glut could develop in 2020.
China and the United States had “constructive talks” on trade in a high-level call on Saturday, state media Xinhua reported on Sunday, but it gave few other details.
On Monday, CNBC quoted a Chinese government source saying the mood in Beijing about a trade deal was pessimistic due to US President Donald Trump’s reluctance to roll back on tariffs.
“The souring trade situation has put a halt to the rally,” said Robert Yawger, director of energy futures at Mizuho in New York, adding crude prices had risen earlier in the session but faded when New York markets opened.Expectations of lower seasonal demand for petrol in the United States also weighed on oil prices, said Andy Lipow, president of Lipow Oil Associates in Houston.
Concerns about plentiful crude supplies in 2020 weighed on the market. US crude stockpiles were seen rising 1.1 million barrels last week, which would be the fourth straight weekly build, a preliminary Reuters poll showed.