Oil Set for Weekly Drop on Rising Saudi Output and Trade Woes
Oil’s on track for the biggest weekly loss in a month as Saudi Arabia’s boosts its crude output
(Bloomberg) -- Oil rose the most in six weeks on upbeat U.S. jobs data and Chinese manufacturing figures, but persistent trade-war concerns kept prices down on the week.
Futures in New York rose 3.7% on Friday, the biggest jump since the attacks on Saudi oil infrastructure in September. U.S. hiring proved unexpectedly resilient in October and new Chinese manufacturing orders rose at the quickest pace in more than six years. Still, prices for the week were dragged down by concerns of a slowing global economy, abundant U.S. crude stockpiles and trade talks.
“The main thing here is the good economic news -- Chinese data suggested it was time to buy back in,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass. “But we’re still in a situation where there’s too much oil out there and the economic news generally looks like we are going for a downturn in the next six months and that’s got people concerned.”
Prices fell 0.8% this week as Chinese officials cast doubt on the potential to reach a comprehensive long-term trade deal with the U.S. even as the two sides get close to signing an initial accord. The protracted conflict, together with ample oil supplies, is putting pressure on the Organization of Petroleum Exporting Countries and its allies to reduce output further to prop up prices.
“Looking ahead, any price recovery faces an uphill struggle given the backdrop of rising supply and cooling demand,” PVM Oil Associates analyst Stephen Brennock wrote in a report.
West Texas Intermediate crude for December delivery rose $2.02 to settle at $56.20 a barrel on the New York Mercantile Exchange.
Brent for January advanced $2.07 to close at $61.69 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $5.42 to WTI for the same month.
China reached a consensus in principle with the U.S. on the first phase of a potential trade deal, according to the country’s Ministry of Commerce. But Chinese officials remain skeptical, saying that would require the U.S. to withdraw tariffs on some $360 billion of imports from China -- something many don’t see Trump being ready to do.
“The trade issue has been overhanging on the market for quite some time,” said Gene McGillian, senior analyst and broker at Tradition Energy Group in Stamford, Conn. “Right now the market is eyeing signs of whether trade negotiations are going to bear fruit.”
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To contact the reporter on this story: Jacquelyn Melinek in New York at jmelinek@bloomberg.net
To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Catherine Traywick
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