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20 November, 2019 00:00 00 AM

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US CRUDE SUPPLY RISES

Oil extends drop to second day

BLOOMBERG, New York
Oil extends drop to second day
Oil dropped again on indications American crude stockpiles will keep expanding, investors still wait for a breakthrough in US-China trade talks. BLOOMBERG PHOTO

Oil dropped for a second day on indications American crude stockpiles and shale output will keep expanding, while investors wait for a breakthrough in US-China trade talks.

Futures declined as much as 0.6 per cent in New York after falling 1.2 per cent on Monday, the most since November 6. US inventories probably rose by 1.5 million barrels last week, according to a Bloomberg survey before government data on Wednesday, while shale output at major fields is expected to increase next month.

Global markets are in a holding pattern, sensitive to any developments on trade after months of closely followed negotiations.

The ebb and flow of trade talks between Washington and Beijing has weighed on oil prices, which have fallen around 14 per cent from an April peak. While negotiators held “constructive discussions” over the weekend, CNBC reported Monday that China is pessimistic about a deal due to President Donald Trump’s reluctance to roll back existing tariffs.

The market is “still very vulnerable to headline risk around the trade dispute, whether positive or negative,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. Oil prices will remain under pressure while the market waits for an agreement on trade, he said.

West Texas Intermediate for December delivery fell 30 cents, or 0.5 per cent, to $56.75 a barrel on the New York Mercantile Exchange as of 7:06 am in London. The contract slid 1.2 per cent to settle at $57.05 on Monday, dropping from the highest close in almost eight weeks. The front-month contract will expire Wednesday.

Brent for January settlement slipped 19 cents to $62.25 on the London-based ICE Futures Europe Exchange. The contract lost 1.4 per cent to close at $62.44 on Monday. The global benchmark crude traded at a $5.42 premium to WTI for the same month.

See also: Commodity Shippers Are Struggling to Obtain 2020-Compliant Fuel

US crude stockpiles are at the highest level in four months. If official government data confirms the forecast increase in inventories, it would be the fourth weekly advance. Output at major American shale fields will climb by 49,000 barrels a day to 9.13 million barrels a day in December, according to a drilling report from the Energy Information Administration.

Word that the White House would extend a license to allow US companies to do business with Chinese firm Huawei Technologies Co. competed with reports suggested Beijing was skeptical about reaching a broad trade deal anytime soon. Economic expansion in Japan and China is floundering, while Germany barely dodged a recession, according to data released last week, as trade conflicts took a toll.

 

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
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Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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