Another day in the U.S-China wilderness and another day of restrained action by oil bulls.
Crude prices advanced modestly in Tuesday’s afternoon trade as those long the market weighed President Donald Trump’s latest remarks that he was happy to wait out a trade deal with China until after the 2020 U.S. elections.
Just a day ago, the market looked ready to break out to new highs after OPEC sources surprised traders by revealing the cartel planned 1.6 million barrels per day of output cuts next year to replace an existing deal to reduce 1.2 million bpd.
By 12:57 PM ET (17:57 GMT), U.S. West Texas Intermediate crude was up 24 cents, or 0.4%, at $56.20 per barrel. It had risen 2% on Monday before settling up just 1.4% on initial reports that the trade deal may have hit a wall.
U.K. Brent, the global benchmark for crude, was up 13 cents, or 0.2%, at $61.05. It rose 0.7% in the previous session.
Trump, speaking in London ahead of a NATO gathering, said he was alright heading into the 2020 election with the U.S.-China trade war unresolved.
“I don’t have a deadline,” the president said. “I like the idea of waiting until after the election for the China deal. But they want to make a deal … we’ll see whether (or) not the deal is going to be right.”
U.S. Commerce Secretary Wilbur Ross told CNBC later that delaying talks with China beyond 2020 may deprive Beijing of the advantage it thinks it has in squeezing Trump for a settlement in its favor before the election.
It “takes off the table something that they may think gives them some leverage,” Ross said. “Because once the election occurs — and the president seems to be in very good shape for the election — once it occurs and he’s back in, now that’s no longer a distraction that can detract from our negotiating position.”
Until early last week, officials in the Trump Administration had maintained that Washington and Beijing were close to the first phase of a deal to end the bitter 16-month trade wrangle between the two countries.
But the mood for a deal decisively changed by the weekend after Trump’s signing of U.S. bills endorsing Washington’s support for pro-democracy fighters in China’s Hong Kong territory — an action clearly disapproved of by Beijing.
The trade deal aside, the market was also awaiting Tuesday’s routine industry reading of U.S crude stockpiles ahead of Wednesday’s official data.
The American Petroleum Institute (API) will issue at 4:30 PM a snapshot of what the Energy Information Administration (EIA) will likely report as official petroleum supply-demand balances for last week. Analysts surveyed by Investing.com think crude stockpiles may have fallen by as much as 1.8 million barrels for the week ended Nov. 29.
If true, it would be the first crude stockpile drop in six weeks.
In the previous week to Nov. 22, the EIA reported a crude inventory rise of 1.6 million barrels versus market expectations for a drop of 418,000.