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Oil steadies after slide on Trump's U.S-China trade comments

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12/03/2019 | 04:55pm EST
FILE PHOTO: Oil pump jacks work at sunset near Midland, Texas

Oil steadied on Tuesday, settling narrowly mixed as expectations of output cuts from OPEC and allied producers helped prices bounce after a slide following comments from U.S. President Donald Trump that a trade deal with China may be delayed.

Brent crude futures fell 10 cents to settle at $60.82 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 14 cents to settle at $56.10 a barrel.

Trump said a U.S.-China trade agreement might have to wait until after next November's presidential election, denting hopes of a quick resolution to a dispute that has weighed on the world economy.

"I have no deadline, no," Trump told reporters in London, where he was to attend a meeting of NATO leaders. "In some ways, I like the idea of waiting until after the election for the China deal."

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are discussing a plan to deepen a supply cut of 1.2 million barrels per day (bpd) by a further 400,000 bpd and extend the pact until June, two sources familiar with the matter said.

Saudi Arabia is pushing the plan to boost the market before the initial public offering of state-owned Saudi Aramco, the sources said.

"We see a possibility of such a decision but one that could prove temporary if compliance among other participants is not strictly adhered to into the New Year," Jim Ritterbusch, president of Ritterbusch and Associates, said in a report. "So while such a decision could spur some oil price strength over the near term, the likelihood of a weak Q1 2020 pricing environment would be increased."

A senior official at the International Energy Agency (IEA) said OPEC producers were unlikely to change their output curbs until the market outlook becomes clearer.

Russian Energy Minister Alexander Novak said he expected this week's meeting to be constructive but added that Moscow had yet to finalize its position.

Vagit Alekperov, CEO of Russia's second-biggest oil producer Lukoil, said it would not be expedient to deepen production cuts in the winter, especially for Russia.

JPMorgan said in a note that it expects OPEC+ to agree to deepen the production cut to 1.5 million bpd until the end of 2020.

OPEC ministers meet in Vienna on Thursday and the broader OPEC+ group gathers on Friday.

U.S. producers have been happy to meet any market shortfalls with record-setting output. Growth into 2020 could range between 100,000 bpd and 1 million bpd.

Crude inventories fell by 3.7 million barrels in the week to Nov. 29 to 445.9 million, data from industry group the American Petroleum Institute showed. Analysts had expected a fall of 1.7 million barrels.

Official government data is due on Wednesday.

By Stephanie Kelly

Stocks mentioned in the article
ChangeLast1st jan.
NK LUKOIL PAO End-of-day quote.
SAUDI ARABIAN OIL COMPANY -1.91% 33.4 End-of-day quote.-1.62%
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