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Oil Falls as Protracted U.S.-China Trade War Undermines Demand

Published 11/25/2019, 10:23 AM
Updated 11/25/2019, 10:52 AM
Oil Falls as Protracted U.S.-China Trade War Undermines Demand

Oil Falls as Protracted U.S.-China Trade War Undermines Demand

(Bloomberg) -- Oil surrendered gains amid conflicting signals about the direction on U.S. and Chinese efforts to mend their fraying trade relationship.

Futures declined as much 1% in New York on Monday after earlier rising 0.5%. In a bid to address a key sticking point in the protracted trade dispute, China pledged to tighten intellectual property rules. The ongoing impasse between the world’s two largest economies has imperiled demand for petroleum-based fuels.

“The market is still highly driven by U.S.-China trade and any tap in negotiations and headlines would be very significant in terms of driving market sentiment and pushing things,” said Kyle Cooper, research director of IAF Advisors in Houston.

Crude has rebounded since early October on signs of progress toward a trade deal but a flood of supply from American shale fields and other sources have limited gains. Oil investors are growing restless as the negotiations drag on, with money managers cutting their net bets on a West Texas Intermediate rally by 13% in the week ended Nov. 19.

WTI for January delivery fell 25 cents to $57.52 a barrel at 10:13 a.m. on the New York Mercantile Exchange.

Brent for January settlement fell 11 cents to $63.28 on the London-based ICE (NYSE:ICE) Futures Europe Exchange, after dropping 0.9% on Friday. The global benchmark traded at a $5.76 premium to WTI.

See also: OPEC+ May Fool Itself Into Thinking Inaction is Best: Julian Lee

China’s concession on intellectual property comes as trade negotiators have been trying to bridge the remaining differences including Beijing’s pledges to buy American grain and meat, and open China’s economy more to foreign companies.

Latest comments

Again trade war is blamed for every thing excellent stuff
Funny how the headlines focus on a trade war that other than the headline will have very little affect on oil supply and demand is not going down. They should be more worried about EV s and they don't want to predict the loss of oil demand and EV rollout.
China economy hurt by Trade War, say,  20% x 600 B = $120 Billion.. China imports 3.4BB oil a year.  Every $10 oil increase, it costs China $34 Billion extra. If a deal is made and Oil shoots up 35, China will pay more money on oil than trade gain.. If that calculation holds, how much incentive for China to sign a deal ?
Up actually and will be up more with a possible phase one trade deal in the works...
As of 12:33 PM ET, still in the red, Andrew. Market could be looking for a more believable narrative.
up again now
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