Investing.com - The unresolved trade war remains an albatross around the neck of the oil market.
Prices of West Texas Intermediate, the benchmark for U.S.-traded crude, and London’s Brent, the global gauge for oil, slipped Monday as traders continued with half-hearted responses to supply-demand factors while awaiting the Trump and Xi administrations to settle at least in part their bitter 16-month trade dispute.
WTI settled down 38 cents, or 0.7%, at $56.86 per barrel. It finished last week up 1.9%.
Brent crude fell by 33 cents, or 0.5%, to $62.18. It finished last week up 1.3%.
"The jawboning on the trade war theme continues, and there is not much to add to it," said Olivier Jakob of Zug, Switzerland-based oil market consultancy PetroMatrix.
"Technically the flat price of crude oil has not been able to align repetitive patterns and WTI still needs to convincingly break the resistance of the 200-day moving average," Jakob said. "For the flat price of crude, we are basically on the same spot as a week ago."
Optimism over a possible U.S.-China deal has faded since President Donald Trump said on Friday that he had not agreed to rolling back tariffs as suggested by Beijing. Trump said there had been incorrect reporting about U.S. willingness to lift duties as part of a phase one agreement, news of which had boosted markets.
Trump is scheduled to speak at the Economic Club of New York on Tuesday, where he is expected to lend some clarity, if not more ambiguity, on when phase one of the trade deal might be and what he's willing to concede to make that happen.
News that Canada’s Keystone oil pipeline started pumping crude oil to the United States Sunday had also tempered Monday’s price fluctuations, traders said. Keystone, which pumps 590,000 barrels a day or 17% of Alberta’s monthly output, is a crucial artery for getting Canadian oil to the United States. The pipeline was shut down on Oct. 30 after 338,000 gallons of crude leaked in northeastern North Dakota.
“Markets are weaker on macro noise generated by Trump-implied pessimism on the China trade deal,” said Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, N.C.
Last week was ugly for the market "between China and Keystone misinformation and I think it has thrown many off the bear trade on the WTI spreads … since we have 48 million barrels in tank and delivered crude for sale that no one wants to run,” said Shelton. “This tells me the path of least resistance is lower.”