Oil falls after Trump warns of China trade deal delay

LONDON (Reuters) – Oil prices slipped on Tuesday after U.S. President Donald Trump said a trade deal with China could be delayed until after the next U.S. presidential election, though losses were capped by an expected deepening of output cuts by OPEC and its allies. Brent futures LCOc1 fell 42 cents to $60.50 a barrel by 1448 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 was down 25 cents at $55.71. Trump said that a trade agreement with China might have to wait until after next November’s presidential election, denting hopes of a quick resolution to a dispute that has weighed on the world economy. “I have no deadline, no. In some ways I think it’s better to wait until after the election,” Trump told reporters in London, where he was due to attend a meeting of NATO leaders. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are discussing a plan to increase an existing supply cut of 1.2 million barrels per day (bpd) by a further 400,000 bpd and extend the pact until June, two sources familiar with the matter said. Saudi Arabia is pushing the plan to deliver a positive surprise to the market before the initial public offering of state-owned Saudi Aramco, the sources said. Russian Energy Minister Alexander Novak on Tuesday said he expected this week’s meeting to be constructive but added that Moscow had yet to finalize its position. Vagit Alekperov, CEO of Russia’s second-biggest oil producer, Lukoil (LKOH.MM), said it would not be expedient to deepen production cuts in the winter, especially for Russia. Goldman Sachs on Monday said that OPEC+ is likely to extend output curbs through June but expects the “uneventful” three-month extension to provide little support to prices. The factors behind this view included a large increase in production from legacy non-OPEC projects and an as yet uncertain outlook for demand growth, it added. The investment bank said it expects Brent to trade around $60 a barrel in 2020 in the absence of geopolitical shocks. JPMorgan said in a note on Tuesday that it expects OPEC+ to agree to deepen the production cut to 1.5 million bpd until the end of 2020. OPEC ministers meet in Vienna on Thursday and the broader OPEC+ group gathers on Friday. While OPEC may cut output, U.S. producers have been only too happy to meet any market shortfalls, with production setting successive records. Growth into 2020, though, could range between 100,000 bpd and 1 million bpd.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s