Oil prices fell on Monday amid growing signs of harm from the U.S.-China trade war that has slowed global economic growth and reduced demand for commodities such as oil. Global benchmark Brent crude was down $1.01 at $58.41 a barrel by 1327 GMT. U.S. West Texas Intermediate crude oil declined 95 cents to $52.83 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 an initial trade deal does not need to be finalised next month.
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.
“A rebound in upside potential looks unlikely at this stage given that bullish catalysts are in short supply,” said Stephen Brennock of oil broker PVM. “Only a meaningful U.S.-China trade agreement or deeper OPEC cuts will change the negative status quo, neither of which seems to be forthcoming,” he said.
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, the world’s second-largest oil producer, said on Sunday it did not meet its supply reduction commitment in September because of an increase in natural gas condensate output as the country prepared for winter. “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.
“The only time this happened was between May and July when Russia was forced to scale back oil production due to contamination in the Druzhba oil pipeline,” he 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 and UK government bond yields rose 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. Yahoo