Continued hope of US-China trade deal buoys oil before afternoon dip below $63
Investors expect price to carry on upwards as Opec prepares production cuts
Oil prices fell in afternoon trading but investor sentiment believes the drop will not last long. Oil has been buoyed in recent weeks by increased hopes of a limited trade deal between China and the US and could rise soon with Opec expected to announce extended production cuts.
Brent crude futures, which rose 1.3 per cent last week, fell 0.90 per cent by afternoon trading GMT, standing at $62.73 per barrel.
West Texas Intermediate (WTI) crude similarly dropped, falling 0.83 per cent to $57.24 per barrel.
This could represent a readjustment on Friday’s gains,caused by positive noises from senior White House official Larry Kudlow on trade talks with Beijing.
Chinese state media Xinhua reported on Sunday that Beijing had described the talks as “constructive” in a high level phone call on Saturday. While both sides are playing a negotiating game of raising hopes, then feigning readiness to walk away, speculators may have taken some of China’s more sceptical noises more seriously than the positive ones.
Last week a Chinese Ministry of Commerce spokesman said that a deal could only be reached if tariffs are lifted, and that the extent of tariff-lifting should reflect the deal’s importance.
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And President Xi Jinping blamed the US for the current state of economic growth around the world observing: “Growing protectionism is threatening international trade and investment, leading to a global economic slowdown.”
China’s central bank started this week by cutting a closely-watched lending rate for the first time in four years, further muddling the state of trade talk progress.
Meanwhile, the oil producers’ organisation Opec outlined its belief that demand will decrease in the near future and is expected to extend its production cuts at a meeting on December 5 at its Vienna headquarters.
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