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Oil dips for second day on lack of trade talk progress

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By Reuters
Oil dips for second day on lack of trade talk progress
FILE PHOTO: Oil pump jacks at sunset near Midland, Texas, U.S., August 21, 2019. REUTERS/Jessica Lutz   -   Copyright  Jessica Lutz(Reuters)

TOKYO (Reuters) – U.S. oil fell for a second day on Tuesday, amid little sign of progress on U.S.-China trade talks, while Saudi Arabian crude output rose, reinforcing concerns about a glut.

U.S. West Texas Intermediate (WTI) crude <CLc1> was down 20 cents, or 0.4%, at $56.66 a barrel by 0039 GMT. The contract dropped 0.7% in the previous session.

Brent crude futures <LCOc1> were yet to trade after falling 0.5% on Monday.

Worries about the impact on oil demand from the fallout of the 16-month U.S.-China trade war, which has weighed on global economic growth, have returned after doubts were cast on the chances of a so-called phase one agreement.

U.S. President Donald Trump said on Saturday that talks with China were moving along “very nicely” but the United States would only make a deal if it was the right one for Washington. He also there had been incorrect reporting about U.S. willingness to lift tariffs.

“Oil prices are struggling at the start of the week as trade concerns derail some of the momentum we saw in October that a phase one deal would deliver a boost for energy demand,” said Edward Moya, senior market strategist at OANDA.

Caution ruled in other markets ahead of a speech by U.S. President Donald Trump to the Economic Club of New York later in the day in case there was any new word on an agreement. [MKTS/GLOB]

On the supply side, Saudi Arabia raised its oil output in October to 10.3 million barrels per day (bpd), although it kept its supplies to oil markets below its OPEC output target.

The Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, will probably extend a deal to limit crude supply but are unlikely to deepen their cuts, Oman’s energy minister said.

OPEC+, which has cut output by 1.2 million bpd since January under a deal set to last until March 2020, will next meet in early December.

Elsewhere, U.S. data showed that crude inventories at Cushing, the delivery point for WTI, fell about 1.2 million barrels in the week to Nov. 8, traders said, citing market intelligence firm Genscape.

Cushing inventories had grown for five weeks in a row through Nov. 1, according to government data.

(Reporting by Aaron Sheldrick; editing by Richard Pullin)