Oil held losses as the United States and China’s inability to agree on a schedule for trade talks worsened demand pessimism, while data showed Organisation of Petroleum Exporting Countries (Opec) producers raised output for the first time this year last month.
Brent futures were steady in London after dropping 2.9 per cent on Monday. Chinese and US officials have yet to agree on the basic terms of re-engagement after the latest round of tariff increases, with mistrust on both sides, according to people familiar with the discussions. Crude output from Opec climbed 0.7 per cent last month from July, a Bloomberg survey showed, despite the group’s efforts to ease a glut.
Nigeria and Saudi Arabia led the rise in Opec production last month, which was the first increase since the cartel and its allies started a new round of output cutbacks at the beginning of the year. Opec is struggling to prop up crude prices as the escalating US-China trade war weakens global demand and as American production continues to grow.
“The festering US-China trade war is exerting downward pressure on oil prices,” said Vandana Hari, the Singapore-based founder of Vanda Insights. “Reports of OPEC recording its first month-on-month output boost of 2019 in August is proving to be a double-whammy.”
Brent for November settlement added 5 cents to $58.71 (Dh215.93) a barrel on the ICE Futures Europe Exchange as of 11:24am in Singapore, after falling as much as 0.5 per cent earlier. The contract lost $1.77 on Monday.
West Texas Intermediate for October delivery declined 20 cents, or 0.4 per cent, from Friday’s close to $54.90 a barrel on the New York Mercantile Exchange. Trades made in Monday’s session was booked for settlement yesterday because of the US Labour Day holiday. The US benchmark crude traded at a $4.04 discount to Brent for the same month.
The US and China have failed to agree in the past week on at least two requests — an American appeal to set some parameters for the next round of talks and a Chinese call to delay new tariffs, said two of the people who asked not to be identified as the discussions are private.
Opec production fell by 200,000 barrels to 29.99 million barrels a day last month, according to a Bloomberg survey based on estimates from officials, ship-tracking data and consultants. The group and its allies — a 24-nation coalition known as Opec+ — had agreed to cut output by 1.2 million barrels a day at the start of this year. Russia aims to “fully comply” with Opec+ production limits this month, according to an Energy Ministry statement.