Oil prices fell amid resurfacing doubts on trade deal between the US and China, as well as excess supplies affecting the market.
The contract climbed 1.3% last week while Brent crude dropped 0.9%, or 55 cents, placing it at $61.96 per barrel. US crude was 47 cents, or 0.8%, at 56.77 per barrel, as it rose 1.9% last week.
US President Trump said that talks on a trade deal with China were going good, quoting it was moving “very nicely.” However, Trump also expressed that the US will only sign a deal with Beijing if it was the right one.
The US-China trade war has been going on for 16 months, throwing global economy into slow growth. The economic effect of the trade war has resulted to lower forecasts for oil demand. Analysts have raised concerns of a possible supply glut in 2020.
Trump also addressed the issue of a spreading report that the US was willing to lift tariffs on China as part of “phase one” of trade deals, saying that it was an incorrect report. The news has shortly boosted markets.
Data over the weekend showed that prices fell the lowest in over three years in October, showing the impacts on the manufacturing sector through low demands.
“Oil prices are dampened by re-escalating trade uncertainties and a strengthening US dollar,” Margarat Yang, market analyst at CMC Markets in Singapore said.
Next year’s oil market forecast may have upside potential, said OPEC Secretary-General Mohammad Barkindo last week, in a way suggesting that there is no need to cut output.
OPEC (Organization of the Petroleum Exporting Countries) and its allies are set to meet in December. OPEC and its allies have cut output by 1.2 million barrels per day since January until March 2020.
In the US, energy companies reduced oil rigs operating for the third time in a row. Drillers cut seven rigs, bringing the number down to 684, which is the lowest since April of 2017 according to Baker Hughes.