Oil Slides On Trade War Anxiety

Oil prices on ebb tide as gloom gathers over global economy

Last week, Brent futures fell 5.7%, its biggest weekly drop since July. "Growing recession risks have capped the upside of oil prices".

Yet, the focus of the market is now firmly on the upcoming trade talks, concerns about demand and economies, and the upcoming USA inventory reports by the API and EIA on Tuesday and Wednesday, respectively. USA crude inventories likely climbed for the fourth consecutive week last week, rising an estimated 2.6 million barrels, a preliminary Reuters poll showed.

The oil market "will be forced to focus more succinctly on global oil demand deterioration as it negotiates through the monthly series of agency reports the rest of this week", Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.

Days before one of the highlights for oil this week-the new round of trade talks between the USA and China-the United States placed 28 Chinese entities on a watch list over alleged "human rights violations and abuses in the implementation of China's campaign of repression, mass arbitrary detention, and high-technology surveillance".

Brent for December settlement increased 42 cents, or 0.7%, to US$58.77 a barrel on the ICE Futures Europe Exchange after closing little changed on Monday.

West Texas Intermediate for November delivery added 7 cents to $52.88 a barrel on the New York Mercantile Exchange as of 7:36 a.m in London.

USA and Chinese officials will meet in Washington on October 10-11 in the next, much-anticipated fresh effort to work out a deal.

The sell-off is now once again approaching a key technical support confluence which has caught the last three attempted breakdowns in price. Without action to resolve trade conflicts and support growth, global economic deceleration could turn into "a more massive slowdown", she said.

The EIA also said USA crude production is expected to rise by 1.27 million bpd in 2019 to a record 12.26 million bpd, slightly above its previous forecast for a rise of 1.25 million.

Oil falls as trade worries outweigh supply disruption risks. Analysts forecast crude inventories in the United States would show a fourth week of growth while gasoline stocks fell, a Reuters poll showed on Monday.

"In Ecuador, protests against austerity measures could reduce the Andean producer's crude output by 59,450 barrels per day", the country's energy ministry said late on Monday.

Saudi Arabia reiterated on Tuesday that it was ready to meet global oil needs.



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