Oil prices fell on Monday (Nov. 11) as investors feared the United States and China are not that close to resolving their ongoing trade dispute. Brent crude was down 69 cents, or 1.1%, at $61.82 by 0730 GMT while U.S. crude was 63 cents, or 1.1%, lower at $56.61 a barrel.
China’s Commerce Ministry on Thursday said Beijing and Washington had agreed to lift existing tariffs on one another’s goods, but US President Trump on Friday said he had not agreed to scrap tariffs on Chinese goods.
Meanwhile, media reported that China and the United States may delay the signing of the first phase of the trade agreement until December.
The protracted trade war between the world’s two biggest economies has dented investor sentiment, slowed economic growth around the world and prompted analysts to lower forecasts for oil demand.
Last month, a Reuters survey showed that oil prices were expected to remain under pressure in 2019 and 2020 due to low demand from a slowing global economy and trade concerns.
The poll of 51 economists and analysts forecast international benchmark Brent crude would average $64.16 a barrel in 2019 and $62.38 in 2020. This is compared to September's $65.19 projection for 2019 and $63.56 for 2020, and an average oil price so far this year of $64.23.
Investors are also concerned about excess supplies of crude. U.S. commercial crude oil inventories jumped by 7.9 million barrels in the week ended 1/11 (maintaining a total U.S. commercial crude inventory of 446.8 million barrels) according to weekly data from the U.S. Energy Department.
Analysts expected a 1.5 million increase. The commercial crude inventory is about 3% above the five-year average for this time of year.
The US Energy Information Administration (EIA) reports have been measuring a steady build-up of oil in stock since mid-September, with only one report in October breaking the streak.
Meanwhile, Iran's President Hassan Rouhani stated on Sunday that his country found a new field containing 53 billion barrels of crude oil, meaning that it could enhance Tehran's oil reserves by one third.
The new oil field is in the southwestern province of Khuzestan which is known for large amounts of oil reserves.
The Organisation of the Petroleum Exporting Countries and its allies led by Russia meet in December. The so-called OPEC+ alliance, seeking to boost oil prices, since January has been implementing production cuts of up to 1.2 million barrels per day until March 2020.
Oman's Oil Minister Mohammed bin Hamad al-Rumhy said that the cartel and other major producers are likely to agree to extend the output cut agreement but are not expected to increase the extent of the cuts
"Extension probably, (deeper) cuts I think unlikely unless things happen in the next couple of weeks," the minister told reporters at the Abu Dhabi International Petroleum Exhibition & Conference on Monday.