The prolonged US-China trade war has already almost halved oil demand growth
Oil halted losses as investors weigh prospects of a thaw in the trade war between the U.S. and China against indications Saudi Arabia is restoring crude output quicker than expected.
Futures were steady in New York after sliding 1.4% on Wednesday. President Donald Trump told reporters at the United Nations that a deal with Beijing could happen “sooner than you think,” offering a glimmer of hope for global demand. Saudi Arabia has boosted total production capacity to more than 11 million barrels a day, according to people with knowledge of the matter, beating its own target for restoring output by about a week.
While oil is heading for the biggest monthly advance since June, it’s given up most of its gains since the strikes on Saudi Arabia. The prolonged US-China trade war has already almost halved oil demand growth, Citigroup Inc. said earlier in the month, predicting a bleak outlook if the dispute drags on. A deepening manufacturing slump in Germany added to demand woes.
“Signs of easing trade tension has overshadowed the bearish raft of indicators that saw oil prices topple head over heels this week,” Stephen Innes, Asia-Pacific market strategist at AxiTrader, said in a note. “Oil prices have been under pressure all week on reports that Saudi Arabia was doing fast work on restoring output after the terrorist attacks.”
West Texas Intermediate for November delivery fell 2 cents to $56.47 a barrel on the New York Mercantile Exchange as of 10:49 a.m. Singapore time. The contract settled at $56.49 on Wednesday, the lowest since Sept. 13. Prices are up 2.5% this month.
Brent for November settlement lost 10 cents to $62.29 a barrel on the ICE Futures Europe Exchange. The contract fell 1.1% on Wednesday to close at $62.39. The global benchmark crude traded at a $5.82 premium to WTI.
Trump said there is a “good chance” a deal can be reached, adding that Beijing is starting to make big purchases of items such as beef and pork. The tone toward China was vastly different earlier this week, with Trump accusing the nation of currency manipulation, theft of intellectual property and product dumping during his speech at the UN General Assembly.
Saudi Aramco has now restored output at the Abqaiq and Khurais facilities to pre-strike levels, said the people with knowledge of presentations it made to analysts ahead of the initial public offering it plans to kick off next month. The U.S. blamed the attacks on Iran, which denied responsibility.