NEW YORK (Reuters) – Oil prices fell more than 1% on Monday after comments from a U.S. official stymied hopes that a U.S.-China trade deal would be reached soon, prompting renewed concern that a slowing global economy would reduce demand for oil.
FILE PHOTO: Oil rigs are seen at Vaca Muerta shale oil and gas drilling, in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian
Brent crude LCOc1 futures fell 89 cents, or 1.5%, to $58.53 a barrel by 10:35 a.m. EDT (1435 GMT). U.S. West Texas Intermediate (WTI) crude CLc1 futures were down 74 cents, or 1.4%, at $53.04 a barrel.
Although President Donald Trump has said he would like to sign a deal with China when he meets his Chinese counterpart at November’s APEC summit, the U.S. commerce secretary said on Monday that an initial trade deal does not need to be finalized next month.
“The key think is to get everything right that we do sign. That’s the important element. That’s what the president is wedded to,” Wilbur Ross said, after being asked if he would mind skipping an APEC signing.
Adding to tensions, China is seeking $2.4 billion in retaliatory sanctions against the United States for non-compliance with a WTO ruling in a tariffs case dating back to the era of President Barack Obama, a document showed.
“Traders are still betting on slowing global growth and are convinced that this will lead to an oversupply of oil,” Phil Flynn, senior energy analyst at Price Futures Group in Chicago, said in a statement.
On the supply side, Russia, the world’s second-largest oil producer, said on Sunday it did not meet its supply reduction commitment to a global deal in September because of an increase in natural gas condensate output as the country prepared for winter.
The Organization of the Petroleum Exporting Countries, Russia and other oil producers, an alliance known as OPEC+, agreed in December to cut supply by 1.2 million barrels per day (bpd) from the start of this year.
“Russia intends to fully comply with the agreed production cut in October, though it is reasonable to doubt whether this will actually be achieved,” Commerzbank analyst Carsten Fritsch said.
European refinery production in September fell 4% from the previous month and 4.2% year-on-year, data from Euroilstock showed on Monday. Production hit 10.451 million barrels per day (bpd), with output declining across all refined products.
Offering some encouragement, European shares opened slightly higher on Monday as investors remained hopeful Britain would avoid a disorderly exit from the European Union.
Analysts have said any British-EU agreement that avoids a no-deal Brexit should boost economic growth and oil demand.
Reporting by Stephanie Kelly in New York; Additional reporting by Bozorgmehr Sharafedin in London and Roslan Khasawneh in Singapore; Editing by Kirsten Donovan and Matthew Lewis