Oil futures fell sharply Friday, with U.S. and global benchmark crude headed for their lowest finish in about a week, as skepticism around a rollback of tariffs in China-U.S. trade talks eroded bullish sentiment on crude prices.
“Conflicting signals over when the United States and China will agree on a deal to end 18 long months of trade disputes and uncertainty” pressured prices for oil Friday, said Lukman Otunuga, senior research analyst at FXTM.
“Although markets remain cautiously optimistic over a trade deal on the horizon, conflicting signals from both sides could weigh on global sentiment and investor confidence,” he told MarketWatch. “Given how oil markets remain heavily influenced by growth concerns and fears of falling demand for oil, further downside could be on the cards if trade hopes falter.”
West Texas Intermediate crude for December delivery
fell $1.36, or 2.4%, to $55.79 a barrel on the New York Mercantile Exchange, after a 1.4% rally. For the week, U.S. benchmark oil prices were down 0.7%, according to FactSet data.
January Brent crude
the international benchmark, shed $1.24, or 2%, to $61.05 a barrel on ICE Futures Europe, following a 0.9% gain on Thursday. For the week, Brent is set to decline 1.1%.
Both WTI and Brent crude were poised to log their lowest settlements since Oct. 31.
Reports Thursday and Friday signaled that there was “fierce internal opposition” in Washington over a new accord with Beijing to cancel tariffs in stages. Trade conflicts between the world’s largest economies have been at the heart of concerns about demand for crude amid a global slowdown.
On top of that, recent inventory reports indicate that supplies are rising faster than uptake.
The Energy Information Administration on Wednesday reported that U.S. crude supplies rose a second straight week, up 7.9 million barrels for the week ended Nov. 1.
“Oil seems like it could be stuck in a range until we get a final phase-one trade deal and get passed the December 5-6th OPEC + meetings,” wrote Edward Moya, senior market analyst at brokerage Oanda, in a note, referring to the gathering of the Organization of the Petroleum Exporting Countries and major suppliers like Russia set to take place next month
Looking ahead, investors await a weekly report from Baker Hughes on rigs drilling for oil, with the oil-field services firm reporting last week that the number of rigs drilling for oil fell by 5 to 691.
On Nymex Friday, December gasoline
declined by 2.1% to $1.6006 a gallon, with prices trading about 3.4% lower for the week, while December heating oil
lost 2% to $1.8811 a gallon, poised for a weekly loss of 2.7%.
December natural gas
traded at $2.783 per million British thermal units, up 1.1 cents, or 0.4%, in Friday dealings, after losing 2% a day earlier. For the week, prices were on track for a rise of 2.5%.
“From April 1 through October 31, 2019, more than 2,569 [billion cubic feet] of natural gas was placed into storage in the Lower 48 states,” the EIA said in a report Friday. “This volume was the second-highest net injected volume for the injection season, falling short of the record 2,727 Bcf injected during the 2014 injection season.”