By Ann Koh and Alex Longley
Crude has been rising since early October on signs the U.S. and China will reach a limited trade deal. But that agreement could now be harder to reach with China threatening to retaliate and saying the new law risks affecting “cooperation in important areas.” On the supply side, expectations that OPEC and its partners will make deeper output cuts next year are evaporating.
“The main price driver, the trade talks, has suffered a blow as President Trump put pen to paper and signed the bill that backs the Hong Kong protesters into law,” PVM Oil Associates analyst Tamas Varga wrote in a report.
West Texas Intermediate for January delivery fell 26 cents to $57.85 a barrel on the New York Mercantile Exchange at 10:38 a.m. in London, after declining 30 cents on Wednesday. Brent for January dropped 26 cents to $63.80 on the ICE Futures Europe Exchange, and traded at a $5.96 premium to WTI.
When signing the Hong Kong legislation, Trump signaled that he didn’t want the broader relationship with China to veer off track, giving some hope a trade deal is still within reach. He said on Tuesday the two sides were in the “final throes” of an agreement that would start to unwind tariffs on about $500 billion in products traded between them.