By Sharon Cho and Rakteem Katakey
Futures in New York slipped 1.1% after climbing 1.3% on Friday. The kingdom voluntarily pledged to pump 400,000 barrels a day less than mandated by OPEC and its allies, translating to total overall curbs for the group of 2.1 million barrels a day. However, there was some gloom on the demand side with data showing Chinese exports fell unexpectedly in November. Hedge funds had slashed bullish wagers on West Texas Intermediate leading up to last week’s OPEC meeting .
“Last week ended on a high with the bullish outcome of the OPEC meeting, so it may just be a correction lower from a strong starting point,” said Jens Naervig Pedersen, a senior analyst at Danske Bank A/S in Copenhagen, referring to Monday’s oil price. It also “looks like the market is a bit anxious with no U.S.-China trade deal in place yet.”
Goldman Sachs Group Inc. raised its 2020 Brent forecast following the OPEC+ deal, saying the group was aiming to tackle the market’s short-term imbalances. Still, the prolonged U.S.-China trade war continues to hang over the market as traders await news on whether Washington will go ahead with a planned hike on Chinese imports later this month.
See also: Saudi Prince’s First OPEC Outing Brings Last-Minute Oil Surprise
West Texas Intermediate for January delivery fell 57 cents to $58.63 a barrel on the New York Mercantile Exchange at 8:31 a.m. local time. The contract closed at $59.20 on Friday, the highest since Sept. 17.
Brent for February settlement dropped 54 cents, or 0.8%, to $63.85 a barrel on the London-based ICE Futures Europe Exchange. The contract rose 1.6% on Friday and ended the week 3.1% higher. The global benchmark crude traded at a $5.32 premium to WTI for the same month.
Grueling Talks
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman promised to take the kingdom’s production down to levels not seen on a sustained basis since 2014, data compiled by Bloomberg show. After two days of grueling talks in Vienna that focused on adjusting OPEC+ quotas, Russia, Iraq, Kuwait and U.A.E. were among the nations that took the largest cuts other than the Saudis.
Chinese exports to the U.S. fell 23% last month from a year earlier, the most since February. When Beijing and Washington agreed to work on a “phase-one deal” in October there was hope that it would lead to a quick resolution of at least some issues. Since then, however, negotiations have stretched out and a fresh set of U.S. tariffs is set to start on Dec. 15.
“The soft Chinese numbers have outweighed the OPEC+ cuts, once again reinforcing the heavy focus on demand at present,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “With just a week left before a fresh set of U.S. tariffs kick in, there’s also a bit of apprehension in the market.”
Other oil-market news: |
---|
|
Share This: