By Saket Sundria and Grant Smith
“At this stage we do not know how successful the negotiations of the ‘phase one’ will be,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “For the time being, risky assets look encouraging more on perceptions than facts. The global oil supply-demand balance needs to tighten.”
Crude has increased since early October and short-sellers slashed their bearish positions on West Texas Intermediate by 41% in the week ended Nov. 12 on prospects for a truce in the trade war. Still, the International Energy Agency predicts the market is likely to remain “calm” next year as soaring production outside OPEC and high inventories keep consumers comfortably supplied.
WTI for December delivery fell 52 cents to $57.20 a barrel on the New York Mercantile Exchange as of 8:33 a.m. local time. The contract added 95 cents to close at $57.72 on Friday for a second weekly gain.
Brent for January settlement was 63 cents lower at $62.67 a barrel on the London-based ICE Futures Europe Exchange, after increasing $1.02 on Friday. The global benchmark crude traded at a $5.37 premium to WTI for the same month.
The trade call was held at the request of U.S. negotiators, and the two sides agreed to remain in close communication, the Chinese Commerce Ministry said in a statement. They were close to concluding a pact about six months ago, only for America to claim that China backed away from verbal commitments when the time came to sign the deal.
Saudi Arabia will sell just 1.5% of Aramco’s shares and set a valuation target of $1.6 trillion to $1.71 trillion for its IPO. The energy giant canceled the London leg of its roadshow, scheduled for Wednesday, according to people familiar with the situation, after earlier deciding not to market the offering in the U.S., Canada or Japan. The deal will now mainly rely on rich Saudi families and other local investors.
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