Oil falls from 2-month high as US-China trade doubts dominate

Marco Green
November 22, 2019

Oil prices retreated on Thursday as a spat over Hong Kong added to worries of a delay in any U.S.

Benchmark Brent crude declined half a percent to $62.09 a barrel, while West Texas Intermediate (WTI) crude futures edged down 0.45 percent to $56.76 a barrel.

That was more than enough to offset news of a likely extension of production cuts by major producers that drove prices higher in the previous session.

On Wednesday, the 20th of November 2019, both United States and UK crude gained more than 2 per cent following reveal of a better-than-anticipated U.S. crude inventory report alongside leading OPEC+ member Russia's assurance that it would continue to cooperate on OPEC's (Organization of Petroleum Exporting Countries) decision in a bid to keep crude oil futures' price in balance ahead of a critical OPEC+ meet next month.

Some traders are blaming lingering doubts on whether the United States and China will be able to reach a partial trade deal that would lift some pressure on the global economy.

U.S. President Donald Trump told reporters on Wednesday that he has not made a trade deal with China yet because Beijing is not "stepping up" in negotiations.

"The key factor for the demand outlook for oil is the trade negotiation now going on", said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking in Sydney. That being said, I don't expect to see this market break through the top anytime soon and I think that the bullish pressure probably has another day or two before the sellers come back and start pushing.

China's commerce ministry on Thursday said that it will strive to reach an initial agreement with the United States to end the long-running trade war but the completion of a so called phase one deal could slide into next year.

A big drawdown of crude stocks at the US delivery hub of Cushing, Oklahoma, however, propelled oil prices higher on Wednesday. Cushing is the delivery point for WTI futures.

Other reports by Click Lancashire

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