By Jacquelyn Melinek
“Chile canceling the summit put some uncertainty as to potentially when the U.S. China trade talks will be resolved,” said Brian Kessens, portfolio manager at Tortoise, a Kansas firm that oversees more than $21 billion in assets. “That’s going to weigh on the crude oil markets.”
West Texas Intermediate crude calendar spreads strengthened and WTI’s discount to Brent narrowed after TC Energy Corp. shut its Keystone oil pipeline Wednesday due to a spill in North Dakota.
A deteriorating global economy weakened by the trade war has driven a 17% slump in crude since late April. That’s put the onus on OPEC and its allies to extend output cuts, though there are questions over Russia’s willingness. The Saudis may need to consider deeper curbs with other Gulf countries if Russia abstains, Citigroup Inc. said.
WTI for December delivery slipped 48 cents to settle at $55.06 a barrel on the New York Mercantile Exchange. The U.S. benchmark was trading in a bearish contango structure, which indicates oversupply.
Brent for December fell 98 cents to $60.61 a barrel on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $5.55 to WTI.
The EIA reported that West Coast gasoline imports jumped to 191,000 barrels a day, the most since May, as cargoes were diverted from New York after prices spiked in California. More tankers may head that way after another spate of upsets sent spot prices jumping again.
“There’s going to continue to be a focus on imports and exports, and in relation to that what’s causing reduced activity is the fairly high tanker prices right now so there is less global crude oil shipping,” Kessens said.
The OPEC+ alliance is due to meet in December to discuss whether to extend or deepen production cuts that expire in March. Brazil’s President Jair Bolsonaro said the country received an informal request to join OPEC, following a conversation with Saudi Crown Prince Mohammed bin Salman, and that he would like to join.
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