Oil Slips on Doubts About U.S.-China Deal, OPEC Outlook

Jessica Jaganathan and Dmitry Zhdannikov;
Wednesday, January 15, 2020

Oil prices slipped on Wednesday on concerns that the U.S./China Phase 1 trade deal may not provide much of a demand boost because the United States intends to keep tariffs on Chinese goods until a second phase deal. 

Prices were also under pressure from an OPEC report saying the producer group expected lower demand for its oil in 2020 even as global demand rises, as rival producers grab market share and the United States looks set for another output record. 

Brent crude was down 17 cents at $64.32 per barrel by 1436 GMT. U.S. West Texas Intermediate crude futures were down 18 cents at $58.05 a barrel. 

U.S. Treasury Secretary Steven Mnuchin said late on Tuesday that tariffs on Chinese goods will remain in place until the completion of a second phase of a U.S.-China trade agreement even though both sides are expected to sign an interim deal later on Wednesday. 

"A pickup with global demand for crude may struggle as U.S.-Chinese tensions linger after some hard-line stances from the Trump administration," said Edward Moya, an analyst at brokerage OANDA.

"Financial markets are disappointed that the Trump administration ... signaled tariffs will remain in place until after the 2020 U.S. Presidential election, depending on whether China comes through on their promises with the Phase 1 agreement." 

U.S. President Donald Trump is due to sign the Phase 1 agreement with Chinese Vice Premier Liu He at the White House on Wednesday. That agreement is expected to include provisions for China to buy up to $50 billion more in U.S. energy supplies. 

U.S. crude inventories rose by 1.1 million barrels, data from the American Petroleum Institute showed, countering expectations for a draw. The United States, whose output has soared in recent years powered by shale, will see total liquids output exceed a 20 million barrel per day (bpd) milestone for the first time, the Organization of the Petroleum Exporting Countries forecast in its market report. 

U.S. liquids output will reach 20.21 million bpd in the fourth quarter of 2020 - almost meeting U.S. demand of 21.34 million bpd, OPEC said. "The continued accommodative monetary policies, coupled with an improvement in financial markets, could provide further support to ongoing increases in non-OPEC supply," OPEC said. 

OPEC and some non-OPEC allies such as Russia have been curbing production to prevent an oil glut and support oil prices above $60 per barrel. Their current deal expires in March. "The collaboration between OPEC and non-OPEC producing countries remains essential in maintaining stability in the oil market," OPEC said. 

(Reporting by Jessica Jaganathan and Dmitry Zhdannikov; Editing by Jane Merriman and Kirsten Donovan)

Categories: Middle East Industry News Oil Asia North America

Related Stories

China's ENN, Zhenhua Oil Ink LNG Supply Deals with ADNOC

MODEC Wins ExxonMobil Guyana’s Hammerhead FPSO Contract

VARD Snags $125M Shipbuilding Deal for Subsea Construction Vessel

‘Ultra-Mega’ Offshore Deal for L&T at QatarEnergy LNG’s North Field Gas Scheme

Cairn India Might Invest in US Oil Servicing Firms to Increase Production

Marine Masters Secures Wellhead Platforms Installation Job Off India

ADNOC Signs 15-Year LNG Supply Deal with Osaka Gas for Ruwais Project

Tokyo Gas Enters LNG Market in Philippines

Petronas Preps for Sabah-Sarawak Gas Pipeline Decom Op

Saipem’s Castorone Vessel on Its Way to Türkiye’s Largest Gas Field

Current News

Shell-Reliance-ONGC JV Complete India’s First Offshore Decom Project

The Future of Long-Idle Drillships: Cold-Stacked or Dead-Stacked?

TMC Books Compressors Orders for FPSO and LNG Vessels

MODEC, Sumitomo Partner Up for Delivery of Gato do Mato FPSO

Chuditch Gas Field Up for Summer Drilling Ops as Sunda Reshapes Ownership Structure

EnQuest Bags Two Production Sharing Contracts off Indonesia

Hanwha Drilling’s Tidal Action Drillship En Route to Petrobras’ Roncador Field

China's ENN, Zhenhua Oil Ink LNG Supply Deals with ADNOC

MODEC Wins ExxonMobil Guyana’s Hammerhead FPSO Contract

India Stretches Bids Deadline for 13 Offshore Deep-Sea Mineral Blocks

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com