ADVERTISEMENT

Oil Stalls as OPEC Signals Status Quo, U.S. Bill Rattles China

Futures declined as much as 0.8% in New York.

Oil Stalls as OPEC Signals Status Quo, U.S. Bill Rattles China
A clean-up crew member stands reflected in a pool of crude oil, leaked from a burst pipeline in the Arava desert. (Photographer: Ariel Jerozolimski/Bloomberg)

(Bloomberg) -- Oil was little changed as OPEC and its allies signaled they won’t deepen output cuts and President Donald Trump signed a law supporting Hong Kong protesters, complicating trade talks with China.

Futures in New York ended Thursday stuck between $58 and $58.50 a barrel for a fourth day as the U.S. Thanksgiving Holiday reduced trading volumes.

Data presented to an OPEC committee in Vienna showed the market will be balanced in 2020 if the group maintains current output levels. Meanwhile, China said that U.S. legislation backing Hong Kong’s autonomy would strain ties just as the two countries work on a trade deal. The developments came on top of a report Wednesday showing a surprise increase in U.S. crude stockpiles and record production.

“You probably have about 15% of the market expecting a deeper market cut from OPEC,” said Daniel Ghali, a TD Securities commodity strategist. “We do not expect that to happen.”

Oil Stalls as OPEC Signals Status Quo, U.S. Bill Rattles China

Crude prices have rebounded since dipping close to $50 a barrel in early October on signs the U.S. and China would reach a partial trade deal. But futures have been hitting a wall since nearing $59 last week, and an agreement could now be harder to reach with Beijing threatening to retaliate and saying the new law risks affecting “cooperation in important areas.”

The Hong Kong bill signed by Trump “may have some implication on the trade file,” Ghali said. “It’s not helping from a negotiating standpoint.”

West Texas Intermediate for January delivery was just 0.2% higher at $58.24 a barrel when trading halted around 1 p.m. in New York, after declining 0.5% on Wednesday. Brent for January dropped 0.3% to $63.87 on the ICE Futures Europe Exchange. The New York Mercantile Exchange was closed for the U.S. holiday, with settlement of Thursday’s electronic trading slated for Friday.

Drivers
  • Russian oil executives proposed sticking with the current OPEC+ deal, Lukoil First VP Ravil Maganov said after a meeting with Energy Minister Alexander Novak.
  • Libya restarted production at a key oil field after clashes between rival fighters forced a temporary halt.
  • Agreement under which Sudan transports landlocked South Sudan’s oil via pipelines to Red Sea port is being extended to March 2022, Sudan’s Oil Ministry says in statement.

--With assistance from Ann Koh and Alex Longley.

To contact the reporter on this story: Robert Tuttle in Calgary at rtuttle@bloomberg.net

To contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, Carlos Caminada

©2019 Bloomberg L.P.