Oil prices slid on Tuesday as Washington’s blacklisting of more Chinese companies dampened hopes for a trade deal between the two countries, though unrest in Iraq and Ecuador lent some support to crude prices.
Both Brent crude LCOc1 and West Texas Intermediate (WTI) CLc1 crude had risen by more than 1% earlier in the day, but by 10:59 a.m. ET (1459 GMT) Brent was down 8 cents, or 0.1%, at $58.27 a barrel and WTI CLc1 was down 17 cents, or 0.3%, at $52.58.
Investors are treading cautiously before U.S.-China trade talks in Washington on Thursday, though prospects for progress dimmed after U.S. President Donald Trump said a quick trade deal was unlikely.
Washington is also moving ahead with discussions over possible restrictions on capital flows into China, with a focus on investments by U.S. government pension funds, Bloomberg reported.
“The (energy) complex will be forced to focus more succinctly on global oil demand deterioration as it negotiates through the monthly series of Agency reports the rest of this week,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
“We are not ruling out a quick upward price reversal as comments out of the White House as well as China will be seeing increasing frequency with both Countries attempting to preclude any developments that might force further downward adjustments in the global economic growth path.”
Oil prices were also pressured by weak economic data after U.S. producer prices fell unexpectedly in September, weighed down by lower costs of goods and services, which could give the Federal Reserve room to cut interest rates again this month.
U.S. stocks fell more than 1% on Tuesday and the pan-European STOXX 600 index snapped a two-day winning streak to lose 1%.
“The market’s focus remains on trade tensions and oil demand concerns, ignoring the elevated geopolitical tensions in the Middle East and lower OPEC production in September,” said UBS oil analyst Giovanni Staunovo. “Growing recession risks have capped the upside of oil prices.” Crude inventories in the United States are expected to have grown for a fourth week while distillates and gasoline stocks are also likely to have fallen, a Reuters poll showed on Monday. —Reuters