By Heesu Lee and Alex Longley

Dec 3, 2019

(Bloomberg) Oil slipped below $56 as U.S. President Donald Trump said there may be a long wait for a trade agreement with China, casting doubt about the strength of demand just days before the OPEC+ meeting.Futures fell 0.6% in New York, erasing earlier gains. Trump said he was willing to wait another year to sign a trade deal with China. The Organization of Petroleum Exporting Countries and its allies, who will gather in Vienna in the coming days, are poised for a debate about some nations’ lax implementation of production cuts.

Oil fell as the U.S. president said a deal with China could take a year

Crude has climbed since early October on signs the U.S. and China were edging closer to an initial trade deal. Without a resolution to the standoff, concerns about the strength of global oil demand next year may return. OPEC+ has signaled it’ll stick with its existing production deal, but Iraq said on Sunday that the group may consider deepening output cuts.

“The global oil supply-demand balance requires an extension of the current OPEC+ cuts,” Goldman Sachs Group Inc. analysts including Damien Courvalin wrote in a report. “Already large speculative buying in recent weeks and some expectations for a longer/larger cut suggests that an uneventful three-month extension is unlikely to provide much upside to current prices.”

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West Texas Intermediate for January delivery fell 31 cents to $55.65 a barrel on the New York Mercantile Exchange as of 7:58 a.m. New York time. Brent for February settlement dropped by 31 cents to $60.61 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $4.98 premium to WTI for the same month.

Read our OPEC+ Reality Check: Deal Extension Likely, Compliance in Focus

OPEC’s production dropped last month led by Angola, whose output fell to the lowest in more than a decade. Iranian volumes, already squeezed to the lowest since the 1980s by U.S. sanctions, dwindled even further.

Other oil-market news:
Russia will propose that OPEC+ accounts for condensate production when judging compliance with output targets, Energy Minister Alexander Novak told reporters in Moscow. Saudi Arabia raised the relative premiums for its lighter crude grades in January as new rules governing the sulfur content of ship fuels come into force. Kuwait’s government will invest as much as $1 billion in Aramco’s initial public offering as Saudi Arabia asks regional allies to bolster the record share sale, people familiar with the matter said.

Other oil-market news:

Russia will propose that OPEC+ accounts for condensate production when judging compliance with output targets, Energy Minister Alexander Novak told reporters in Moscow.
Saudi Arabia raised the relative premiums for its lighter crude grades in January as new rules governing the sulfur content of ship fuels come into force.
Kuwait’s government will invest as much as $1 billion in Aramco’s initial public offering as Saudi Arabia asks regional allies to bolster the record share sale, people familiar with the matter said.