US Markets

Oil drops from 2-month high on U.S.-China trade talk uncertainty

Credit: REUTERS/Leonhard Foeger

Oil prices pulled back from their highest levels in nearly two months on Friday amid continued overtainty over whether the United States and China will be able to reach a partial trade deal that would lift some pressure on the global economy.

By 0422 GMT, Brent crude futures LCOc1 had slid 31 cents, or 0.5%, to $63.66 a barrel. West Texas Intermediate crude CLc1 was at $58.20 a barrel, down 38 cents or 0.7%.

China has invited top U.S. trade negotiators for a new round of face-to-face talks in Beijing amid continued efforts to strike at least a limited deal, the Wall Street Journal reported on Thursday citing unidentified sources.

"The key factor for the demand outlook for oil is the (U.S.-China) trade negotiation currently going on," said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking in Sydney.

"With oil near the top of recent trading ranges it's no surprise to see a bit of selling pressure during the session today."

Prices had touched their highest since late September on Thursday after Reuters reported that the Organization of the Petroleum Exporting Countries (OPEC) and Russia are likely to extend existing production cuts by another three months to mid-2020 when they meet on Dec. 5.

Oil was also buoyed by comments from China's commerce ministry on Thursday that it will strive to reach an initial agreement with the United States to end the pair's long-running trade war, allaying fears that talks might be unravelling. However, the completion of a phase one deal could slide into next year.

News that last week saw the biggest drawdown in three months for U.S. crude stock stockpiles at Cushing, Oklahoma also underpinned prices earlier this week. Cushing is the delivery point for WTI futures. EIA/S

Elsewhere, traders are also keeping a keen eye on the impact on oil production at OPEC countries Iran and Iraq amid ongoing protests.

Several major economies - the United States, France and Germany - will release manufacturing data later today which could impact the market, McCarthy said.

(Reporting by Florence Tan Editing by Kenneth Maxwell & Kim Coghill)

((Florence.Tan@thomsonreuters.com; +65 6870 3497; Reuters Messaging: florence.tan.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More