Oil extended declines, breaking below $62 a barrel on Tuesday, pressured by limited progress in efforts to resolve the trade conflict between the United States and China as well as an expected rise in U.S. crude inventories.
A Chinese government source was quoted by CNBC on Monday as saying there was gloom in Beijing about prospects for a trade deal. The long-running dispute has hit economic growth prospects and clouded the outlook on oil demand.
Brent crude, the global benchmark, was down 64 cents at $61.80 a barrel . It had reached $63.65 — the highest since Sept. 24 — on Thursday. U.S. West Texas Intermediate (WTI) crude dropped 66 cents to $56.39.
“The less than promising reports coming from China on the trade war may have taken some of the energy out of the rally,” said Craig Erlam, analyst at brokerage OANDA.
“We’re certainly seeing less momentum in the recent rallies.”
Oil also declined on the prospect of a further increase in U.S. crude inventories, suggesting ample supplies.
The average estimate from six analysts polled by Reuters was for crude inventories to have risen by about 1.1 million barrels in the week to Nov. 15, representing a fourth consecutive weekly gain.
The American Petroleum Institute releases its supply report at 2030 GMT on Tuesday and the government’s official figures are due on Wednesday.
Oil found some support from tension in the Middle East, home to top exporter Saudi Arabia and other core OPEC members.
Protestors in Iraq blocked a commodities port on Tuesday and people took to the streets in Iran to demonstrate against a rise in petrol prices.
The United States on Monday said it will no longer waive sanctions related to Iran’s Fordow nuclear plant, while armed members of Yemen’s Iran-aligned Houthi movement seized a vessel towing a South Korean rig over the weekend.
Brent has rallied about 15% this year, supported by a supply pact between the Organization of the Petroleum Exporting Countries and allies including Russia.
Producers meet in Vienna over Dec. 5-6 and are expected to extend the pact beyond March.
On Tuesday three sources said that Russia is unlikely to agree to deepen cuts in oil output at that meeting, but could commit to extend existing curbs to support Saudi Arabia. The sources told Reuters that OPEC and its allies are worried about weak demand growth in 2020.
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